Prepare the general journal entries for the following transactions. 20-a Jan. 2 Purchased land with a building on it for $750,000. The land is worth $300,000. Paid $150,000 down and signed a mortgage to be paid over 20 years. Dec. 31 Depreciation is computed using the straight-line method. The building has an estimated salvage value of $75,000 and an estimated life of 20 years. 20-b Jul. 1 The building and the land are sold for $825,000 cash. If an amount box does not require an entry, leave it blank.

Journal Entries:

Jan. 2:

Debit Land $300,000

Debit Building $450,000

Credit Cash $150,000

Credit Mortgage $600,000

To record the purchase of land and building.

December 31:

Debit Depreciation Expense on Building $18,750

Credit Accumulated Depreciation $18,750

To record the depreciation expense for the year.

July 1:

Debit Depreciation Expense on Building $9,375

Credit Accumulated Depreciation $9,375

To record depreciation expense for six months.

Debit Cash Account $825,000

Credit Sale of Land $330,000

Credit Sale of Building $495,000

To record the sale of the land and building for cash.

Debit Sale of Land $300,000

Debit Sale of Building $450,000

Credit Land $300,000

Credit Building $450,000

To close the accounts to the sale of asset accounts.

Debit Accumulated Depreciation $28,125

Credit Sale of Building $28,125

To close the accumulated depreciation account.

Explanation:

a) Data and Calculations:

Jan. 2

Cost of purchased land with building = $750,000

Value of the land = $300,000

Value of the building = $450,000 ($750,000 - $300,000)

Ratio of land to building = 4:6

Payment made on the purchase = $150,000

Allocation of payment:

Land = $60,000 ($150,000 * 0.4)

Building = $90,000 ($150,000 * 0.6)

Mortgage signed = $600,000

Allocation of Mortgage:

Land = $240,000 ($600,000 * 0.4)

Building = $360,000 ($600,000 * 0.6)

Method of depreciation = straight-line

Salvage value of building = $75,000

Estimated life of building = 20 years

Depreciable amount of building = $375,000 ($450,000 - $75,000)

Depreciation expense per year = $18,750 ($375,000/20)

Depreciation expense for six months = $9,375 ($18,750/12 * 6)

July 1: Sale of building and land = $825,000

Allocation of sale proceeds:

Building = $495,000 ($825,000 * 0.6)

Land = $330,000 ($825,000 * 0.4)

answer; the correct answer should be (demonstrations); good luck

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.