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Financial Accounting: Journal Entries, Practice Exam

** 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.

Instructions:
(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.

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