Problem 7-2 Purchase and Depreciate Two Items of Property, Plant, & Equipment Recently the Ace Manufacturing...

 

 

Transcribed Image Text:

Problem 7-2 Purchase and Depreciate Two Items of Property, Plant, & Equipment Recently the Ace Manufacturing Company purchased an office building and a new computer system. Below is the information about these two new items of Property, Plant, & Equipment. The following are the facts for the office building: Date on which the building was purchased Purchase price Method of payment April $1,800,000 paid $300,000 cash - signed a note for the remainder of the purchase price 50 years $0 2019 .... Estimated life Estimated value at the end of 50 years Depreciation method Straight-Line The following are the facts for the computer system: Date on which computer was purchased Purchase price Method of payment May 1, 2019 $58,800 ....... Cash Estimated life 7 years Estimated value at the end of 7 years $0 Depreciation method Straight-Line The following is a partial list of the accounts in Ace's General Ledger. These are the only accounts you need for this problem. > Cash D Building (asset account) D Accumulated Depreciation-Building D Computer (asset account) D Accumulated Depreciation-Computer D Note Payable > Depreciation Expense Remove and use the forms on Pgs 215 and 216 to complete this problem. Requirement 1 Prepare the General Journal entry to record the purchase of the new building on April 1. Requirement 2 Calculate the amount of monthly depreciation for the new building. Requirement 3 Prepare the April 30 General Journal adjusting entry to record depreciation of the office building for the month of April. Requirement 4 Prepare the General Journal entry to record the purchase of the new computer system on May 1. Requirement 5 Calculate the amount of monthly depreciation for the new computer system. Requirement 6 Prepare the May 31 General Journal adjusting entry to record depreciation of the computer system for the month of May. Requirement 7 Prepare the May 31 General Journal adjusting entry to record depreciation of the office building for the month of May. Requirement 8 Ace prepares financial statements monthly. Assuming that these are Ace's only two items of Property, Plant, & Equipment, what would be the amount of Depreciation Expense on Ace's May Income Statement? Problem 7-2 Purchase and Depreciate Two Items of Property, Plant, & Equipment Recently the Ace Manufacturing Company purchased an office building and a new computer system. Below is the information about these two new items of Property, Plant, & Equipment. The following are the facts for the office building: Date on which the building was purchased Purchase price Method of payment April $1,800,000 paid $300,000 cash - signed a note for the remainder of the purchase price 50 years $0 2019 .... Estimated life Estimated value at the end of 50 years Depreciation method Straight-Line The following are the facts for the computer system: Date on which computer was purchased Purchase price Method of payment May 1, 2019 $58,800 ....... Cash Estimated life 7 years Estimated value at the end of 7 years $0 Depreciation method Straight-Line The following is a partial list of the accounts in Ace's General Ledger. These are the only accounts you need for this problem. > Cash D Building (asset account) D Accumulated Depreciation-Building D Computer (asset account) D Accumulated Depreciation-Computer D Note Payable > Depreciation Expense Remove and use the forms on Pgs 215 and 216 to complete this problem. Requirement 1 Prepare the General Journal entry to record the purchase of the new building on April 1. Requirement 2 Calculate the amount of monthly depreciation for the new building. Requirement 3 Prepare the April 30 General Journal adjusting entry to record depreciation of the office building for the month of April. Requirement 4 Prepare the General Journal entry to record the purchase of the new computer system on May 1. Requirement 5 Calculate the amount of monthly depreciation for the new computer system. Requirement 6 Prepare the May 31 General Journal adjusting entry to record depreciation of the computer system for the month of May. Requirement 7 Prepare the May 31 General Journal adjusting entry to record depreciation of the office building for the month of May. Requirement 8 Ace prepares financial statements monthly. Assuming that these are Ace's only two items of Property, Plant, & Equipment, what would be the amount of Depreciation Expense on Ace's May Income Statement?

Answer rating: 100% (QA)

JOURNAL Date Particulars Debit Credit Requirement 1 April 1 2021 Building Dr 1800000 To cash 300000 ... View the full answer