You are engaged in the audit of the financial statements of Holman Corporation for the year ended December 31, 20X6. The accompanying analyses of the Property, Plant, and Equipment and related accumulated depreciation accounts have been prepared by the chief accountant of the client. You have traced the beginning balances to your prior year’s audit working papers.

All plant assets are depreciated on the straight-line basis (no residual value taken into consideration) based on the following estimated service lives: building, 25 years; all other items, 10 years. The company’s policy is to take one half-year’s depreciation on all asset additions and disposals during the year.

Your audit revealed the following information:

The company completed the construction of a wing on the plant building on June 30. The service life of the building was not extended by this addition. The lowest construction bid received was $17,500, the amount recorded in the Buildings account. Company personnel constructed the addition at a cost of $16,000 (materials, $7,500; labor, $5,500; and overhead, $3,000).

On August 18, $5,000 was paid for paving and fencing a portion of land owned by the company and used as a parking lot for employees. The expenditure was charged to the Land account.

The amount shown in the machinery and equipment asset retirement column represents cash received on September 5 upon disposal of a machine purchased in July 20X2 for $48,000. The chief accountant recorded depreciation expense of $3,500 on this machine in 20X6.

Harbor City donated land and a building appraised at $100,000 and $400,000, respectively, to Holman Corporation for a plant. On September 1, the company began operating the plant. Since no costs were involved, the chief accountant made no entry for the above transaction.

Required:

Prepare the adjusting journal entries that you would propose at December 31, 20X6, to adjust the accounts for the above transactions. Disregard income tax implications. The accounts have not been closed. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round any division. Round your answers to the nearest dollar amount.)
Transcribed Image Text:B Homepage - ACCT-3620-500 - A X O Question 14 - HW 13 - Connect b Answered: Problem 13-37 [LO 13 x A ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Flms.mheducation.com%252Fmghmiddleware%252Fmheproduct. * 8 : E Apps Tech|Express O Tech Mail B llearn y Yahoo Mail E Audit Connect HW 13 G 6.61/10 Total polnts awarded Submitted Help Exit You skipped this question in the previous attempt. 14 You are engaged in the audit of the financial statements of Holman Corporation for the year ended December 31, 20X6. The accompanying analyses of the Property, Plant, and Equipment and related accumulated depreciation accounts have been prepared by the chief accountant of the client. You have traced the beginning balances to your prior year's audit working papers. HOLMAN CORPORATION Analysis of Property, Plant, and Equipment and Related Accumulated Depreciation Accounts Year Ended December 31, 20X6 0.11/3.5 polnts awarded Final 12/31/X5 $422,500 120,000 Per Ledger 12/31/X6 $427,500 Assets Scored Description Additions Retirements Land $ 5,000 Buildings Machinery and equipment 17,500 40,400 137,500 $ 26,000 $ 26,000 385,000 399,400 еВok $927,500 $ 62,900 $964,400 References Accumulated Depreciation Description Buildings Machinery and equipment Final 12/31/X5 $ 60,000 Additions* $4 5,150 Per Ledger 12/31/X6 $ 65,150 Retirements 39,220 $ 44,370 173, 250 212,470 $223,250 $277,620 *Depreciation expense for the year. Mc Graw Hill < Prev Next > 14 of 14 4:04 PM P Type here to search E O G 4x 4/17/2021 近

Question

You are engaged in the audit of the financial statements of Holman Corporation for the year ended December 31, 20X6. The accompanying analyses of the Property, Plant, and Equipment and related accumulated depreciation accounts have been prepared by the chief accountant of the client. You have traced the beginning balances to your prior year’s audit working papers.

All plant assets are depreciated on the straight-line basis (no residual value taken into consideration) based on the following estimated service lives: building, 25 years; all other items, 10 years. The company’s policy is to take one half-year’s depreciation on all asset additions and disposals during the year.

Your audit revealed the following information:

The company completed the construction of a wing on the plant building on June 30. The service life of the building was not extended by this addition. The lowest construction bid received was $17,500, the amount recorded in the Buildings account. Company personnel constructed the addition at a cost of $16,000 (materials, $7,500; labor, $5,500; and overhead, $3,000).
On August 18, $5,000 was paid for paving and fencing a portion of land owned by the company and used as a parking lot for employees. The expenditure was charged to the Land account.
The amount shown in the machinery and equipment asset retirement column represents cash received on September 5 upon disposal of a machine purchased in July 20X2 for $48,000. The chief accountant recorded depreciation expense of $3,500 on this machine in 20X6.
Harbor City donated land and a building appraised at $100,000 and $400,000, respectively, to Holman Corporation for a plant. On September 1, the company began operating the plant. Since no costs were involved, the chief accountant made no entry for the above transaction.

Required:

Prepare the adjusting journal entries that you would propose at December 31, 20X6, to adjust the accounts for the above transactions. Disregard income tax implications. The accounts have not been closed. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round any division. Round your answers to the nearest dollar amount.)

B Homepage - ACCT-3620-500 - A X
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b Answered: Problem 13-37 [LO 13 x
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14
You are engaged in the audit of the financial statements of Holman Corporation for the year ended December 31, 20X6. The
accompanying analyses of the Property, Plant, and Equipment and related accumulated depreciation accounts have been prepared by
the chief accountant of the client. You have traced the beginning balances to your prior year's audit working papers.
HOLMAN CORPORATION
Analysis of Property, Plant, and Equipment
and Related Accumulated Depreciation Accounts
Year Ended December 31, 20X6
0.11/3.5
polnts awarded
Final
12/31/X5
$422,500
120,000
Per Ledger
12/31/X6
$427,500
Assets
Scored
Description
Additions
Retirements
Land
$ 5,000
Buildings
Machinery and equipment
17,500
40,400
137,500
$ 26,000
$ 26,000
385,000
399,400
еВok
$927,500
$ 62,900
$964,400
References
Accumulated Depreciation
Description
Buildings
Machinery and equipment
Final
12/31/X5
$ 60,000
Additions*
$4
5,150
Per Ledger
12/31/X6
$ 65,150
Retirements
39,220
$ 44,370
173, 250
212,470
$223,250
$277,620
*Depreciation expense for the year.
Mc
Graw
Hill
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Accepted Answer

Depreciation expense
12-year = 16000*1/12*1/2 = 666.67
per client on 25 year life = 17500*1/25*1/2…