Journal Entries for Plant Assets During the first few days of the year, Coastal Company entered into the following transactions:
1Purchased a parcel of land with a building on it for $3,500,000 cash. The building, which will be used in operations, has an estimated useful life of30 years and a salvage value of $200,000. The assessed valuations for property tax purposes show the land at $280,000 and the building at $2,520,000.
2Paid $180,000 for the construction of an asphalt parking lot for customers. The parking lot is expected to last 15 years and has no salvage value.
3Paid $500,000 for the construction of a new entrance to the building.
4Purchased store equipment, paying the invoice price (including seven percent sales tax) of $89,660 in cash. The estimated useful life of the equipment is five years, and the salvage value is $4,000.
5Paid $640 freight on the new equipment.
6Paid $1,200 to repair damages to floor caused when the store equipment was accidentally dropped as it was moved into place.
7Paid $50 for an umbrella holder to place inside front door (customers may place wet umbrellas in the holder). The holder is expected to last 20 years.
Required
a. Prepare journal entries to record these transactions.
b. Prepare the December 31 journal entries to record depreciation expenses for the year. Double-declining balance depreciation is used for the equipment, and straight-line depreciation is used for the building and parking lot.