At December 31, 2019, Swifty Corporation reported the following as plant assets.

Land $3,980,000
Buildings $28,210,000
Less: Accumulated depreciation-buildings 13,200,000 15,010,000
Equipment 48,670,000
Less: Accumulated depreciation-equipment 4,980,000 43,690,000
Total plant assets $62,680,000
During 2020, the following selected cash transaction occurred.

April 1 Purchased land for $2,200,000
May 1 Sold equipment that cost $840,000 when purchased on January 1, 2016. The equipment was sold for $504,000
June 1 Sold land purchased on June 1, 2010 for $1,450,000. The land cost $399,000
July 1 Purchased equipment for $2,480,000
Dec. 31 Retired equipment that cost $491,000 when purchased on December 31,2010. The company received no proceeds related to salvage.
-Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.

-Record adjusting entries for depreciation for 2020. Credit account titles are automatically indented when the amount presented in the problem. If no entry is required, select "No Entry for the account titles and enter 0.

April 01 2020

Land                                                            Debit          $ 2,200,000

Cash                                                           Credit                             $2,200,000

To record purchase of land

May 01 2020

Cash                                                            Debit         $ 504,000

Allowance for depreciation equipment    Debit         $ 363,720

Equipment                                                   Credit                              $ 840,000

Gain on sale of equipment                         Credit                              $   27,720

To record sale of equipment and to recognise gain on sale

June 01 2020

Cash                                                              Debit      $ 1,450,000

Land                                                              Credit                            $ 399,000

Gain in sale of land                                      Credit                            $1,051,000

To record sale of land and gain on the sale

July 01 2020

Equipment                                                     Debit    $ 2,480,000

Cash                                                              Credit                         $ 2,480,000

To record purchase of equipment

December 31 2020

Allowance for depreciation                          Debit    $ 491,000

Equipment                                                      Credit                        $ 491,000

To record retirement of equipment

The adjusting entry for depreciation is as follows:

December 31 2020

Depreciation expense - Equipment             Debit  $ 4,985,000

Depreciation expense - Buildings                Debit  $   578,200

Allowance for depreciation - Equipment     Credit                     $ 4,985,000

Allowance for depreciation - Buildings        Credit                     $    578,200

Explanation:

Computation for Depreciation expense for the year

Equipment Jan 01 2020                        $ 48,670,000  for 4 months @ 10 %

Sales - May 01 2020                              $(     840,000)

Adjusted balance May 01 2020            $ 47,830,000 for 2 months @ 10 %

Purchases July 01 2020                        $   2,480,000

Adjusted balance July 01 2020            $  50,310,000 for 6 months @ 10 %

Depreciation expense for 4 months = $ 48,670,000*10 % *4/12 = $1,622,333

Depreciation expense for 2 months = $ 47,830,000*10 % *2/12 = $   797,167

Depreciation expense for 6 months = $ 51,310,000*10 % *6/12 =$ 2,565,500          

Total depreciation equipment                                                      $ 4,985,000

Depreciation on buildings     $ 28,910,000 * 2 %                       $     578,200

Depreciation has to be recorded for full year on assets retired on December 31 2020

Computation of gain and loss on sale of equipment

Cost of equipment  purchased on January 1 2016                       $ 840,000

Depreciation rate                                          10 %

Equipment sold on May 01 2020

Depreciation charged for 4 years and 3 months @ 10 %

$ 840,000 * 4.33 *10 %                                                                   $  363,720

Net book value of equipment disposed on May 01 2020            $ 476,280

Sale value of equipment                                                                  $ 504,000

Gain on sale of equipment                                                             $ (27,720 )                                  

The gain on sale of land is the difference between the cost and sales proceeds since land is not depreciated

Sale proceeds - Cost = $ 1,450,000 - $ 399,000 =                      $ 1,051,000

The assets that was retired on Dec 31 2020 was purchased on December 31 2010 and was considered for depreciation for 10 years and was fully depreciated and had ni book value on the date of retirement

answer/// there is an inverse relationship between price and quantity demanded;