The following transactions and adjusting entries were completed by a local deliv

Question

The following transactions and adjusting entries were completed by a local delivery company called Fast Delivery. The company uses straight-line depreciation for delivery vehicles, double-declining-balance depreciation for buildings, and straight-line 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 purchase a delivery van. The van has an estimated useful life of five years and a residual value of $9,400.

Paid $700 cash to paint a small office in the warehouse building.

Paid $84,000 cash to UPS to begin operating Fast Delivery business as a franchise using the name The UPS Store. This franchise right expires in five years.

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.

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.)

The following transactions and adjusting entries were completed by a local delivery company called Fast Delivery. The company uses straight-line depreciation for delivery vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for franchise rights.

Explanation / Answer

2015 Jan-02 Warehouse building 179000 Cash 179000 Jul-01 Delivery van 47000 Cash 47000 Oct-02 Building maintenance expenses 700 Cash 700 Oct-13 Van maintenance expenses 100 Cash 100 Dec-01 Franchise rights-UPS 84000 84000 Dec-31 Depreciation expense-Warehouse [(179000-3700)/20] 8765 Accumulated depreciation-Warehouse 8765 Depreciation expense-Delivery van ((47000-9400)/5))/2 3760 Accumulated depreciation-Delivery van 3760 Amortization expense-Franchise (84000/5)/12 = 1400 Accumulated amortization expense-Franchise 1400 2016 Jun-30 Depreciation expense-Warehouse =8765/2= 4383 Accumulated depreciation-Warehouse 4383 Cash 143000 Accumulated depreciation-Warehouse 13148 Loss on disposal of warehouse building 22853 Warehouse building 179000 Dec-31 Depreciation expense-Delivery van (47000-9400)/5) 7520 Accumulated depreciation-Delivery van 7520 Amortization expense-Franchise (84000/5) 16800 Accumulated amortization expense-Franchise 16800

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