P9-4A Youngstown Company – Property, Plant, and Equipment Journal Entries

P9-4A Youngstown Company

In this tutorial, we will look at Property, Plant, and Equipment  (PP&E) journal entries for Youngstown Company. This will show you how to handle journal entries and depreciation for assets throughout the course of a year.

 
  • Student: Tyler Muffty
  • Textbook: Principles of Accounting II
  • Course: Accounting Week 3
 

P9-4A At January 1, 2017, Youngstown Company reported the following property, plant, and equipment accounts:

  • Accumulated depreciation—buildings $62,200,0
  • Accumulated depreciation—equipment 54,000,000
  • Buildings 97,400,000
  • Equipment 150,000,000
  • Land 20,000,000

April 1st

Purchased land for $4.4 million. Paid $1.1 million cash and issued a 3‐year, 6% note payable for the balance. Interest on the note is payable annually each April 1.

Date Account Debit Credit
1-Apr Land 4,400,000
Cash 1,100,000
Notes Payable 3,300,000

May 1st

Sold equipment for $300,000 cash. The equipment cost $2.8 million when originally purchased on January 1, 2009.

1-May Depreciation Expense              140,000
Accumulated Depreciation                     140,000
( Depreciation = (2,800,000 / 10 years) * 0.5 years )
1-May Cash 300,000
Accumulated Depreciation           2,380,000
Equipment 2,800,000
Gain on Disposal                  (120,000)
( Depreciation = (2,800,000 / 10 years) * 8.5 years )

June 1st

Sold land for $3.6 million. Received $900,000 cash and accepted a 3‐year, 5% note for the balance. The land cost $1.4 million when purchased on June 1, 2011. Interest on the note is due annually each June 1.

1-Jun Cash 900,000
Notes Receivable 2,700,000
Land 1,400,000
Gain on Disposal 2,200,000

July 1st

Purchased equipment for $2.2 million cash.

1-Jul Equipment 2,200,000
Cash 2,200,000

December 31st

Retired equipment that cost $1 million when purchased on December 31,2007. No proceeds were received.

1-Jul Equipment 2,200,000
Cash 2,200,000

Adjusting Entries

31-Dec Depreciation Expense           2,435,000
Accumulated Depreciation – Building 2,435,000
( Depreciation = (97,400,000 / 40 years)
31-Dec Depreciation Expense
Accumulated Depreciation – Equipment        14,720,000
( Depreciation = (150,000,000 / 10 years)               14,720,000

 

 

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