PB9-4 Recording Transactions and Adjustments for Tangible and Intangible Assets
ID: 2524714 • Letter: P
Question
PB9-4 Recording Transactions and Adjustments for Tangible and Intangible Assets [LO 9-1, 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-line depreciation for delivery vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for franchise rights. Paid $171,000 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 $36,000 cash to purchase a delivery van. The van has an estimated useful life of five years and a residual value of S7,200 January 2, 2015 July 1,2015 October 2,2015 Paid $700 cash to paint a small office in the warehouse building October 13, 2015 Paid $150 cash to get the oil changed in the delivery van. December 1, 2015 Paid $96,000 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 years. Recorded depreciation and amortization on the delivery van, warehouse building, and franchise right. Sold the warehouse building for $137,000 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
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Date Account Debit Credit Jan 2 2015 Building 171000 Cash 171000 (paid cash for purcahse of building) Jul1 2015 delivery van 36000 cash 36000 (paid cash for purchase of delivery van) Oct 2 2015 Repair and Maintenance Expense 700 Cash 700 (paid for painting) Oct 13 2015 Repair and Maintenance Expense 150 Cash 150 (paid for oil change) Dec 1 2015 Franchise Right 96000 Cash 96000 (paid for franchise right) Dec 31 2015 Depreciation Expense-Building 17100 171000*10% for 20 year, rate is 5%, so double to 10% Depreciation Expense-Delivery Van 2880 (36000-7200)/5 5760 For 6 Months 5760/2 Amortization Expense 1600 96000/5 19200 For 1 Month 19200/12 Accumulated Depreciation-Building 17100 Accumulated Depreciation-Delivery Van 2880 Accmulated Amortization 1600 (Dep/Amortization recorded) Jun 30 2016 Depreciation Expense-Building 7695 (171000-17100)*10%*6/12 Accumulated Depreciation-Building 7695 (dep for 6 months) Jun 30 2016 Cash 137000 Accumulated Depreciation (17100+7695) 24795 Loss on sale of Building 9205 Building 171000 (sale of building on loss) Dec 31 2016 Depreciation Expense-Delivery Van 5760 (36000-7200)/5 Amortization Expense 19200 96000/5 Accumulated Depreciation-Delivery Van 5760 Accmulated Amortization 19200 (Dep/Amortization recorded)Related Questions
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