Problem
Sophie Miller Associates surveys American eating habits. The company's accounts include Land, Buildings, Office equipment, and Communication equipment, with a separate accumulated depreciation account for each asset. During 2011, Sophie Miller completed the following transactions:
Requirement
1. Record the transactions in the journal of Sophie Miller Associates. The company ends its account year on December 31.
jan 1 Traded in old office equipment with book value of $47,000 (cost of $141,000 and accumulated depreciation of $94,000) for new equipment. Miller also paid $70,000 in cash.
April 1 Acquired land and communication equipment in a group purchase. Total cost was $290,000 paid in cash. An independent appraisal valued the land at $228,375 and the communication equipment at $76,125.
Sep. 1 Sold a building that cost $570,000 (accumulated depreciation of $270,000 through December 31 of the preceding year). Miller received $390,000 cash from the sale of the building. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of $50,000.
Dec. 31 Recorded depreciation as follows:Communication equipment is depreciated by the straight-line method over a 5-year life with zero residual value. Office equipment is depreciated using the double-declining-balance method over 6 years with $1,000 residual value.