PB9-4 Recording Transactions and Adjustments for Tangible and Intangible Assets

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. January 2, 2015 July 1.2015 October 2, 2015 October 13, 2015 December 1, 2015 Paid $178.000 cash to purchase a small warehouse building near the airport. The building has an estimated life of 20 years and a residual value of $3,800. Paid $46.000 cash to purchase a delivery van. The van has an estimated useful life of five years and a residual value of se.200. Paid $800 cash to paint a small office in the warehouse building. Paid $200 cash to get the oil changed in the delivery van. Paid $85,500 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 S142.000 cash. (Record the depreciation on the building prior to recording its disposal.) Recorded depreciation on the delivery van and amortization on the franchise night. Determined that the franchise right was not impaired in value. December 31, 2015 June 30, 2016 December 31, 2018 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

Date Particulars Debit Credit 02-Jan-15 Buildings $178,000.00 Cash $ 178,000.00 (Being purchase of warehouse building in cash) 01-Jul-15 Vehicle $ 46,000.00 Cash $ 46,000.00 (Being purchase of delivery van in cash) 02-Oct-15 Repairs and maintenance - Buildings $      600.00 Cash $       600.00 (Being cash paid for painting in a small office of warehouse building) 13-Oct-15 Repairs and maintenance - Vehicles $      200.00 Cash $       200.00 (Being cash paid for oil change in delivery van ) 01-Dec-15 Franchise Rights $ 85,500.00 Cash $ 85,500.00 (Being cash paid to UPS for franchise rights) 31-Dec-15 Depreciation & Amortisation Expenses $ 22,905.00 Accumulated Depreciation - Building $ 17,800.00 Accumulated Depreciation - Vehicle $    3,680.00 Accumulated Amortisation - Franchise Rights $    1,425.00 (Being depreciation and amortisation expenses on Building , Vehicle and Franchise Rights) 30-Jun-16 Depreciation & Amortisation Expenses $    8,010.00 Accumulated Depreciation - Building $    8,010.00 (Being depreciation on Building ) 30-Jun-16 Cash $142,000.00 Accumulated Depreciation - Building $ 25,810.00 Loss on sale of Building $ 10,190.00 Buildings $ 178,000.00 (Being cassh sale of Building ) 31-Dec-16 Depreciation & Amortisation Expenses $ 24,460.00 Accumulated Depreciation - Vehicle $    7,360.00 Accumulated Amortisation - Franchise Rights $ 17,100.00 (Being depreciation and amortisation expenses on Vehicle and Franchise Rights) 31-Dec-16 No Journal Entry Required (Being Franchise Rights not impaired in value)

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