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    Financial Accounting: Journal Entries, Practice Exam

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    ** Please see the attached file for the complete problem description formatted in Excel **

    At December 31, 2007, Ruiz Corporation reported the following plant assets.
    Land $3,000,000
    Buildings $26,500,000
    Less: Accumulated depreciation?buildings 12,100,000 $14,400,000
    Equipment 40,000,000
    Less: Accumulated depreciation?equipment 5,000,000 $35,000,000
    Total plant assets $52,400,000

    During 2008, the following selected cash transactions occurred.
    Apr 1 Purchased land for $2,200,000
    May 1 Sold equipment that cost $660,000 when purchased on January 1, 2001. The
    equipment was sold for $200,000
    Jun 1 Sold land for $1,800,000 The land cost $700,000
    Jul 1 Purchased equipment for $1,300,000
    Dec 31 Retired equipment that cost $500,000 when purchased on December 31, 1998. No
    salvage value was received.

    (a) Journalize the transactions. (Hint: You may wish to set up T accounts, post beginning balances, and then post 2008 transactions.) Ruiz uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.

    (Please see the attached file)

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    Solution Summary

    This solution provides a sample completion of a given journal entry question.