hrome File Edit View History F Bookmarks People Window Help 13% CO Fri 4:53 PM a
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hrome File Edit View History F Bookmarks People Window Help 13% CO Fri 4:53 PM a tpx PB9-4 Recording Transactions and Adjustments for Tangible and Intangible Assets Lo 91 LO 9-2 Lo 9-3, Lo 9-4, Lo 9-5,Lo 9-6 The following transactions and adjusting entries were completed by a local delivery company called Fast Delivery. The company uses straight-ine depreciation for delivery vehicles, double-declining-balance depreciation for buildings, and straight-ine amortization for franchise rights. Paid $179,000 cash to purchase a small warehouse building near the airport. The building has an estimated life of 20 years and a residual value of $3,700. Paid $47,000 cash to of five years and a residual Varlue of $9,400 January 2,2015 July 1, 2015 a delivery van. The van has an estimated useful life October 2, 2015 Paid $700 cash to paint a small office in the warehouse building. October 13, 2015 Paid $100 cash to get the oil changed in the delivery van December 1, 2015 Paid $84,000 cash to UPS to begin operating Fast Delivery business as a franchise December 31, 2015 June 30, 2016 December 31, 2016 using the name The UPS Store. This franchise right expires in five yoars Recorded depreciation and amortization on the delivery van, warehouse building. and franchise right Sold the warehouse building for $143,000 cash. (Record the depreciation on the building prior to recording its disposal.) Recorded depreciation on the delivery van and amortization on the franchise right Determined that the franchise right was not impaired in value. Required: Prepare the journal entries required on each of the above dates. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)Explanation / Answer
Journal Entry Date Particulars Dr. Amt. Cr. Amt. 2-Jan-15 Warehouse Building 179,000.00 Cash 179,000.00 (To record the purchase of Warehouse Building) 1-Jul-15 Delivery Van 47,000.00 Cash 47,000.00 (To record the purchase of Delivery Van) 2-Oct-15 Repair & Maintenance Expense - Building 700.00 Cash 700.00 (To record the amount paid for painting of office) 13-Oct-15 Repair & Maintenance Expense - Van 100.00 Cash 100.00 (To record the amount paid for oil change of Van) 1-Dec-15 Franchisee Right 84,000.00 Cash 84,000.00 (To record the amount paid for franchisee rights) 31-Dec-15 Deprecition Expenses 21,660.00 Accumulated Depreciation - Warehouse Building 17,900.00 Accumulated Depreciation - Delivery Van 3,760.00 (To record the depreciation expenses) Depreciation per Annum - Delivery Van = ($47,000 - $9,400) / 5 Years Depreciation per Annum - Delivery Van = $7,520 Depreciation -2015- Delivery Van = $7,520 X 6/12 = $3,760 Rate of Dep- Building - DDBM = 2 X 5% (Rate of Dep. Straight Line) Rate of Dep- Building - DDBM = 10% Depreciation Expense - 2015 - Warehouse Building = $179,000 X 10% = $17,900 31-Dec-15 Amortization Expense 1,400.00 Accumulated Amortization - Franchisee Rights 1,400.00 (To record the amortization expenses) Amortization Expense - 2015 = $84,000 / 5 Years X (1/12) = $1,400 30-Jun-16 Deprecition Expenses 8,055.00 Accumulated Depreciation - Warehouse Building 8,055.00 (To record the depreciation expenses) Dep. Exp. - 2016 - Building = ($179,000 - $17,900) X 10% X (6/12) Dep. Exp. - 2016 - Building = $8,055 30-Jun-16 Cash 143,000.00 Accumulated Depreciation - Warehouse Building 11,815.00 Loss on Sale of Warehouse Building 24,185.00 Warehouse Building 179,000.00 (To record the sale of Building) Book Value of Building - 30 June 2015 = $179,000 - ($17,900 + $8,055) Book Value of Building - 30 June 2015 = $153,045 Loss on sale of Building = $143,000 - $153,045 Loss on sale of Building = $10,045 31-Dec-16 Deprecition Expenses 7,520.00 Accumulated Depreciation - Delivery Van 7,520.00 (To record the depreciation expenses) 31-Dec-16 Amortization Expense 16,800.00 Accumulated Amortization - Franchisee Rights 16,800.00 (To record the amortization expenses) Amortization Expense - 2015 = $84,000 / 5 Years = $16,800
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