Questions #16 Yoshi Company completed the following transactions and events invo

Question

Questions #16 Yoshi Company completed the following transactions and events involving its delivery trucks. 2016 Jan. 1 Paid $25,015 cash plus $1,785 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 $5,400 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

a). Depreciation for Year 2017 :-

b). Calculate Book Value and Gain (Loss) for sale of truck on Dec. 2018.

c). Journal Entries :-

Particulars Amount ($) Total Cost ($25015 + $1785) 26800 Less : Depreciation for the year 2016 (($26800 - $2300)/5) (4900) Book Value 21900 Less : Revised Salvage Value (2700) Remaining Cost to Depreciate 19200 Years of life remaining 3 Total Depreciation for the year 2017($19200/3) 6400

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