delivery company called Fast The following transactions and adjusting entrles we
ID: 2568381 • Letter: D
Question
delivery company called Fast The following transactions and adjusting entrles were completed by a local Delivery. The company uses straight-line depreciation for delivery vehidles, double-declining-balance depreciation for buildings, and straight-line amortization for franchise rights. January 2, 2015 Paid $167,000 cash to purchase a small warehouse building near the airport. The building has an estimated life of 20 years and a residual value of $3,600. July 1, 2015 Paid $41,000 cash to purchase a delivery van. The van has an estimated useful life of five years and a residual value of $8,200. October 2,2015 Paid $600 cash to paint a small office in the warehouse building. October 13,2015 Paid $150 cash to get the oill changed in the delivery van. December 1, 2015 Paid $102,000 cash to UPS to begin operating Fast Delivery business as a December 31, 2015 Recorded depreciation and amortization on the delivery van, warehouse building. June 30, 2016 Sold the warehouse building for $134,000 cash. (Record the depreciation on the December 31, 2016 Recorded depreciation on the delvery van and amortization on the franchise right. franchise using the name The UPS Store. This franchise right expires in five years and franchise right building prior to recording its disposal.) Determined that the franchise right was not impaired in value. Required: Prepare the journal entnes required on each of the above dates. (If no entry is required for a transactionlevent, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.) ist 1 Record the purchase of a warehouse building for $167,000 cash. 2 Record the purchase of a delivery van for $41,000 cash. / a Record the payment for painting a smal office in the warehouse build ing for $600. Record the payment for oil changes in the delivery van of 150 ebitCredit s Record the francrise rights purchased for $102.000 to a low for the operation of a fost deivery business Record the depreciation and amortization expenses on the delivery van, warehouse building, and franchise rights for the year 2015 Record the depreciation of the warehouse building up to the date of sale in 2016 Record the sale of the warehouse buildng for $134,000 9 Record the depreciatian and amoruzation expenses on the delivery van and franch se nights for the year 2016Explanation / Answer
Journal Entries
date
explanation
debit
credit
Depreciation on Building
double declining method
Jan 2 2015
Building
167000
Straight line rate in %
1/20
5%
cash
167000
Double declining rate
straight line rate*2
10
1-Jul
delivery van
41000
cost of building
167000
cash
41000
less scrap value
3600
amount to be depreciated
163400
2-Oct
repair and maintenance expense
600
Annual depreciation 2015
163400*10%
16340
cash
600
Year end balance
147060
depreciation for next 6 month of 2016
150660*10%*1/2
7533
13-Oct
maintenance expense -delivery vehicle
150
total accumulated depreciation
16340+7533
23873
cash
150
cost of building
167000
1-Dec
franchise
102000
accumulated depreciation
23873
cash
102000
book value
143127
selling price
134000
31-Dec
Depreciation Expense-building
16340
loss on sale
9127
accumulated depreciation - building
16340
Depreciation on vehicle
31-Dec
Depreciation expense-deivery vehicle
3280
cost of vehicle
41000
accumulated depreciation
3280
less scrap value
8200
value to be depreciated
32800
31-Dec
amoortization expense-franchise
1700
straight line method of depreciation so depreciation for 6 month -2015
32800/5*1/2
3280
accumulated reserve for amortization-franchise
1700
straight line depreciation for 2nd year-2016
32800/5
6560
30-Jun
Depreciation Expense-building
7353
Amortization of franchise right
accumulated depreciation - building
7353
cost of acquisition
102000
life
5 years
30-Jun
cash
134000
amortization for year 1 for 1 month>
(102000/5)/12
1700
accumulated depreciation - building
23873
amortization for year 2 for= 2016
1020000/5
20400
loss on sale of building
9127
building
167000
31-Dec
Depreciation expense-deivery vehicle
6560
accumulated depreciation
6560
31-Dec
amoortization expense-franchise
20400
accumulated reserve for amortization-franchise
20400
Journal Entries
date
explanation
debit
credit
Depreciation on Building
double declining method
Jan 2 2015
Building
167000
Straight line rate in %
1/20
5%
cash
167000
Double declining rate
straight line rate*2
10
1-Jul
delivery van
41000
cost of building
167000
cash
41000
less scrap value
3600
amount to be depreciated
163400
2-Oct
repair and maintenance expense
600
Annual depreciation 2015
163400*10%
16340
cash
600
Year end balance
147060
depreciation for next 6 month of 2016
150660*10%*1/2
7533
13-Oct
maintenance expense -delivery vehicle
150
total accumulated depreciation
16340+7533
23873
cash
150
cost of building
167000
1-Dec
franchise
102000
accumulated depreciation
23873
cash
102000
book value
143127
selling price
134000
31-Dec
Depreciation Expense-building
16340
loss on sale
9127
accumulated depreciation - building
16340
Depreciation on vehicle
31-Dec
Depreciation expense-deivery vehicle
3280
cost of vehicle
41000
accumulated depreciation
3280
less scrap value
8200
value to be depreciated
32800
31-Dec
amoortization expense-franchise
1700
straight line method of depreciation so depreciation for 6 month -2015
32800/5*1/2
3280
accumulated reserve for amortization-franchise
1700
straight line depreciation for 2nd year-2016
32800/5
6560
30-Jun
Depreciation Expense-building
7353
Amortization of franchise right
accumulated depreciation - building
7353
cost of acquisition
102000
life
5 years
30-Jun
cash
134000
amortization for year 1 for 1 month>
(102000/5)/12
1700
accumulated depreciation - building
23873
amortization for year 2 for= 2016
1020000/5
20400
loss on sale of building
9127
building
167000
31-Dec
Depreciation expense-deivery vehicle
6560
accumulated depreciation
6560
31-Dec
amoortization expense-franchise
20400
accumulated reserve for amortization-franchise
20400
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