Assume Interstellar Communications Ltd.’s balancesheet includes the following assets under Property,
Plant, and Equipment: Land, Buildings, and Motor-Carrier Equipment.Interstellar Communications has
a separate accumulated depreciation account for each of theseassets except land. Further, assume
that Interstellar completed the following transactions:
• Jan 2: Sold motor-carrier equipment with accumulated depreciationof $67,000 (cost of
$130,000) for $70,000 cash. Purchased similar new equipment with acash price of $176,000.
• July 3: Sold a building that had cost $650,000 and hadaccumulated depreciation of $145,000
through December 31 of the preceding year. Depreciation is computedon a straight-line basis.
The building had a 40-year useful life and a residual value of$250,000. Interstellar received
$100,000 cash and a $400,000 note receivable.
• Oct 29: Purchased land and a building for a single price of$420,000. An independent appraisal
valued the land at $150,000 and the building at $300,000.
• Dec 31: Recorded depreciation as follows: New motor-carrierequipment has an expected useful
life of six years and an estimated residual value of 5% of cost.Depreciation is computed on the
double-diminishing-balance method. Depreciation on buildings iscomputed by the straight-line
method. The new building carries a 40-year useful life and aresidual value equal to 10% of its
cost.
1. Please journalize each of the transactions from Jan 2nd – Dec31st.