Walton Company – Journal and A

At December 31, 2005, Walton Company reported the following as 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 2006, the following selected cash transactions occurred. April 1 Purchased land for $2,200,000. May 1 Sold equipment that cost $750,000 when purchased on January 1, 2002.The equipment was sold for $460,000. During 2006, the following selected cash transactions occurred.

April 1 Purchased land for $2,200,000.
May 1 Sold equipment that cost $750,000 when purchased on January 1, 2002.The equipment was sold for $460,000.
June 1 Sold land purchased on June 1, 1996, for $1,800,000. The land cost $300,000.
July 1 Purchased equipment for $2,400,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 1996. No salvage value was received.

Instructions

(a)
Journalize the above transactions.Walton 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.

Apr. 1 Land
Cash

May 1 Depreciation Expense
Accumulated Depreciation-Equipment

1 Cash
Accumulated Depreciation-Equipment
Equipment
Gain on Disposal

June 1 Cash
Land
Gain on Disposal

July 1 Equipment
Cash

Dec. 31 Depreciation Expense
Accumulated Depreciation-Equipment

31 Accumulated Depreciation-Equipment
Equipment

(b)
Record adjusting entries for depreciation for 2006.

Dec. 31 Depreciation Expense
Accumulated Depreciation-Buildings

31 Depreciation Expense
Accumulated Depreciation-Equipment

(c)
Prepare the plant assets section of Walton’s balance sheet at December 31, 2006.

Walton Company
Partial Balance Sheet
December 31, 2006
Plant Assets
Land $
Buildings $
Less: Accumulated depreciation-buildings

Equipment
Less: Accumulated depreciation-equipment
Total plant assets $