At December 31, 2020, Metlock, Inc. reported the following as plant assets. Land $ 3,560,000 Buildings $29,120,000 Less: Accumulated depreciation—buildings 13,240,000 15,880,000 Equipment 47,320,000 Less: Accumulated depreciation—equipment 4,650,000 42,670,000 Total plant assets $62,110,000 During 2021, the following selected cash transactions occurred. April 1 Purchased land for $2,190,000. May 1 Sold equipment that cost $1,080,000 when purchased on January 1, 2017. The equipment was sold for $648,000. June 1 Sold land purchased on June 1, 2011 for $1,510,000. The land cost $395,000. July 1 Purchased equipment for $2,480,000. Dec. 31 Retired equipment that cost $473,000 when purchased on December 31, 2011. The company received no proceeds related to salvage. Journalize the above transactions.

Explanation:

The Journal entry is shown below:-

Depreciation on basis of straight line method

= $473,000 ÷ 10

= $47,300

Depreciation Expense of 2020 = $47,300 × 1

= $473,00

Depreciation Dr,                               $47,300

       To accumulated Depreciation           $47,300

(Being depreciation is recorded)

Accumulated Depreciation Dr         $473,000

                    To Equipment a/c                      $473,000

(Being equipment retired)

( being equipment retired is recorded)

Balance Sheet Partial

Equipment Balance = Equipment - Accumulated Depreciation

= $48,247,000 -  $8,493,000

= $39,754,000

Equipment = Opening Balance + Purchases - Sales - Retired Equipment

= 47,320,000 + 2,480,000 - 1,080,000 - 473,000

= $ 48,247,000

Accumulated Depreciation ( Equipment) = Opening Balance + Depreciation on equipment on 1 May + Depreciation on equipment on 31 Dec + Depreciation on equipment on 31 Dec - Depreciation on equipment on 1 May - Depreciation on retired equipment on 31 Dec

= 4,650,000 + 36,000 + 47,300 + 4,700,700 - 468000 - 473,000

= $ 8,493,000

Total Plants Assets  = Land + (Building - Accumulated Depreciation) + (Equipment - Accumulated Depreciation)

= $5,355,000 + ( $29,120,000 - $13,822,400) + $39,754,000

= $60,406,600

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