At December 31, 2011, Craig Corporation reported these plant assets. Land $4,000,000 Buildings $28,800,000 Less: Accumulated depreciation-building $11,520,000 $17,280,000 Equipement $48,000,000 Less: Accumulated depreciation-equipment $ 5,000,000 $43,000,000 Total plant assets $64,280,000 During 2012, the following selected cash transactions occured. April 1. Purchased land for $2,600,000 May 1. Sold equipment that cost $750,000 when purchased on January 1, 2007. The equipment was sold for $367,000. June 1. Sold land purchased on June 1, 2000, for $1,800,000. The land cost $800,000. Sept. 1. Purchased equipment for $840,000. Dec. 31. Retired fully depreciated equipment that cost $470,000 when purchased on December 31, 2002. No salvage value was recieved
a) Journalize the transactions. (Hint: You may wish to set up T accounts, post beginning balances, and then post 2012 transactions). Craig uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year 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 retirment.
b) Record adjusting entries for depreciation for 2012. (Note: The only assets that are fully depreciated are those that were retired on December 31.) c) Prepare the plant assets section of Craig's balance sheet at December 31, 2012.