At December 31, 2011, Starkey Company reported the following as plant assets.

Land

$ 2,000,000

Buildings

$20,000,000

Less: Accumulated depreciation buildings

8,000,000

12,000,000

Equipment

30,000,000

Less: Accumulated depreciation equipment

4,000,000

26,000,000

Total plant assets

$40,000,000

During 2012, the following selected cash transactions occurred.

April 1

Purchased land for $1,200,000.

May 1

Sold equipment that cost $420,000 when purchased on January 1, 2008. The equipment was sold for $240,000.

June 1

Sold land purchased on June 1, 2002, for $1,000,000. The land cost $340,000.

July 1

Purchased equipment for $1,100,000.

Dec. 31

Retired equipment that cost $300,000 when purchased on December 31, 2002. No salvage value was received.

Journalize a series of equipment transactions related to purchase, sale, retirement, and depreciation.

Instructions

(a) Journalize the above transactions. Starkey uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-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.

(b) Record adjusting entries for depreciation for 2012.

Check answers: Depreciation expense

Building $400,000;

Equipment $2,983,000

(c) Prepare the plant assets section of Starkey’s balance sheet at December 31, 2012.

check Answer: Total plant assets $38,295,000