Yoshi Company completed the following transactions and events involving its deli
ID: 2580077 • Letter: Y
Question
Yoshi Company completed the following transactions and events involving its delivery trucks. 2016 Jan. 1 Paid $25,015 cash plus $1,935 in sales tax for a new delivery truck estimated to have a five-year life and a $2,300 salvage value. Delivery truck costs are recorded in the Trucks account. 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 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 events.
Explanation / Answer
Total cost 26950 Less accumulated depreciation (from 2016) 4,930 Book value 22,020 Less revised salvage value 2,700 Remaining cost to be depreciated 19,320 Years of life remaining 3 Total depreciation for 2017 6440 b Depreciation expense (for 2016) 4,930 Depreciation expense (for 2017) 6,440 Depreciation expense (for 2018) 6,440 Accumulated depreciation 12/31/2018 17,810 Book value of truck at 12/31/2018 Total cost 26950 Accumulated depreciation -17,810 Book value 12/31/2018 9,140 Loss on sale of truck 3,640 c Date General Journal Debit Credit Jan 01, 2016 Trucks 26,950 Cash 26,950 Dec 31, 2016 Depreciation expense—Trucks 4,930 Accumulated depreciation—Trucks 4,930 Dec 31, 2017 Depreciation expense—Trucks 6,440 Accumulated depreciation—Trucks 6,440 Dec 31, 2018 Depreciation expense—Trucks 6,440 Accumulated depreciation—Trucks 6,440 Dec 31, 2018 Cash 5,500 Accumulated depreciation—Trucks 17,810 Loss on disposal of trucks 3,640 Trucks 26,950
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