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Yoshi Company completed the following transactions and events involving its delivery trucks. Year 1 Jan. 1 Paid $20,515 cash plus $1,485 in sales tax for a new delivery truck estimated to have a five-year life and a $2,000 salvage value. Delivery truck costs are recorded in the Trucks account. Dec. 31 Recorded annual straight-line depreciation on the truck. Year 2 Dec. 31 The truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,400. Recorded annual straight-line depreciation on the truck. Year 3 Dec. 31 Recorded annual straight-line depreciation on the truck. Dec. 31 Sold the truck for $5,300 cash. Required: 1-a. Calculate depreciation for Year 2. 1-b. Calculate book value and gain (loss) for sale of Truck on December 31, Year 3. 1-c. Prepare journal entries to record these transactions and events.

Respuesta :

Tundexi

Answer:

1a. Particulars                                                        Amount

Total cost                                                               $22,000

Less: Accumulated depreciation (from 2016) $4,000

Book value                                                             $18,000

Less Revised salvage value                                  $2,400

Remaining cost to be depreciated                       $15,600

/ Years of life remaining                                         3 years

Total depreciation for 2017                                  $5,200

1b. Particulars                                                Amount

Depreciation expense (for 2016)                 4,000

Depreciation expense (for 2017)                 5,200

Depreciation expense (for 2018)                 5,200

Accumulated depreciation 12/31/2018     14,400

Book value of truck at 12/31/2018

Total cost                                 22,000

Accumulated depreciation     (14,400)

Book value 12/31/2018            7,600

Truck sold                                5,300

Loss on sale of truck              2,300

2. Date    General Journal                                        Debit$          Credit$

2016    

Jan. 1       Trucks                                                       22,000

                       Cash                                                                        22,000

Dec. 31 Depreciation expense-Trucks                 4,000

                    Accumulated depreciation-Trucks                           4,000

                    (22,000 - 2,000) / 5

2017    

Dec. 31   Depreciation expense-Trucks (Note 1)     5,200

                     Accumulated depreciation-Trucks                           5,200

2018    

Dec. 31   Depreciation expense-Trucks                 5,200  

                     Accumulated depreciation-Trucks                             5,200

Dec. 31   Cash                                                          5,300  

              Accumulated depreciation-Trucks         14,400

              Loss on disposal of trucks (Note 2)        2,300

                      Trucks                                                                         22,000

Total depreciation for 2017 is $5,200

Case: 1

Computation of depreciation;

Particulars                                                        Amount  

Total cost[$20,515 + $1,485]                          $22,000  

Less: Accumulated dep($2,000 + $2,000)    $4,000  

Book value of machine                                   $18,000  

Less: Salvage value                                        $2,400    

Remaining cost                                               $15,600

Total depreciation for 2017 = $15,600 / 3

Total depreciation for 2017 = $5,200

Case: 2

Particulars                                                Amount  

Depreciation (for 2016)                           $4,000  

Depreciation (for 2017)                            $5,200  

Depreciation (for 2018)                            $5,200      

Accumulated depreciation 12/31/2018    $14,400

Book value of truck;

Total cost                                 $22,000  

Accumulated depreciation     ($14,400)  

Book value 12/31/2018            $7,600  

Truck sold                                  $5,300  

Loss on sale of truck                $2,300

Case: 3

Journal entries;

Particular                                                        Debit    Credit

Jan. 1       Trucks                            A/c         $22,000

                Cash                             A/c                         $22,000

Dec. 31 Depreciation expense    A/c           $4,000

            A. depreciation          A/c                                 $4,000

                 

Dec. 31   Depreciation expense  A/c            $5,200

               Accumulated depreciation  A/c                     $5,200

 

Dec. 31   Depreciation expense   A/c          $5,200    

            Accumulated depreciation  A/c                      $5,200

Dec. 31  Cash                         A/c                $5,300    

             Accumulated depreciation A/c    $14,400  

             Loss on disposal     A/c                $2,300  

                     Trucks                A/c                              $22,000

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