Reference no: EM132593518
Question - Base Company carried out the following transactions during Years 1 to Year 6.
Year 1:
January 1: Purchased equipment for $120,000 cash. It has a 10-year life, a $20,000 residual value, and will be depreciated using the straight-line method.
January 1: Purchased land for $280,000 cash.
October 31: Borrowed $340,000 from the bank by issuing a three-month 9% note.
December 31: Accrued interest on the note of October 31. You can round to the nearest full month.
December 31: A pending product liability lawsuit will more likely than not be lost. A reasonable estimate of the loss is $50,000. We accrued the contingency.
December 31: Journalized depreciation on the equipment.
Year 2:
January 31: Repaid the October 31 note plus interest.
Year 6:
July 10: Traded our land (acquired in Year 1) plus $60,000 cash for a small airplane. The airplane has a market value of $380,000.
September 20: Sold the equipment for $52,000 cash. Depreciation expense for Years 2 to 5 has already been properly recorded.
Instructions - Make the required journal entries for the above transactions?