any help is appreciated Yoshi Company completed the following transactions and e
ID: 2524243 • Letter: A
Question
any help is appreciated
Yoshi Company completed the following transactions and events involving its delivery trucks. 2016 Jan. 1 Paid $25,015 cash plus $1,635 in sales tax for a new delivery truck estimated to have a five-year ??fe and a Dec. 31 Recorded annual straight-line depreciation on the truck. 2017 Dec. 31 Due to new information obtained earlier in the year, the truck's estimated useful life was changed from five to $2,150 salvage value. Delivery truck costs are recorded in the Trucks account. four years, and the estimated salvage value was increased to $2,700. Recorded annual straight-line depreciation on the truck, 2018 Dec. 31 Recorded annual straight-line depreciation on the truck. Dec. 31 Sold the truck for 5,500 cash. Required 1-a. Calculate depreciation for year 2017. 1-b. Calculate book value and gain (loss) for sale of Truck on December, 2018. 1-c. Prepare journal entries to record these transactions and eventsExplanation / Answer
1-a Depreciation for the truck in 2017
Cost of the truck = $ 25015 (Cash paid ) + $1635 (Sales tax)
= $26650
Salvage value = $ 2150
Life of the asset = 5 Years
Depreciation for 2016 = $26650 - $2150 / 5
= $4900
Book value at the end of the year 2016 = $21750
Opening book value for 2017 = $21750
Depreciation for the year 2017 = Closing book value - Revised residual value / Useful life
= $21750 - $2700 / 4
= $ 4762.5
1-b Book Value of asset and gain/loss on sale of truck at the end of 2018
Depreciation for 2018 = $21750 - $2700 / 4
= $ 4762.5
Book value of the asset = Opening book value - Depreciation for the year
= $16987.5 - $4762.5
= $12225
Gain or loss on sale = Sale value of the asset - Book value of the asset
= $5500 - $12225
Loss on sale = -$6725
1-cJournal Entries
Date Accounting Titles / Explanations Debit Credit
Jan 1 2016 Truck ac dr. $26,650
To cash ac $ 25,015
To tax paid ac $ 1,635
(Being asset purchased)
Dec 31 2016 Depreciation ac dr. $ 4,900
To truck ac $4,900
(Being depreciation made during the year)
Dec 31 2016 P/L ac dr. $4900
To Depreciation ac $4900
Dec 31 2017 Depreciation ac dr. $ 4762.5
To truck ac $4762.5
(Being dep charged for the year 2017)
Dec 31 2017 P/L ac dr. $4762.5
To Depreciation ac $4762.5
(Being dep transferred to profit and loss ac)
Dec 31 2018 Depreciation ac dr. $ 4,762.5
To truck ac $4,762.5
(Being dep charged for the year 2017)
Dec 31 2018 P/L ac dr. $4,762.5
To Depreciation ac $4,762.5
(Being dep transferred to profit and loss ac)
Dec 31 2018 Cash ac dr. $5,500
Loss on sale of asset ac dr. $6,725
To truck ac $12,225
(Being asset sold at the end of the year)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.