AU Removals’ financial year ends on 30 June each year. On 1 July 2019, AU Removals purchased a truck for $168,000. You are the accountant of the business and you have estimated that the truck is to last 15 years and to have $7,000 residual value at that point. As per the business plan, the truck can be used to drive 350,000 kilometres over the 15 years, with per-year projections of 21,000 km, 28,000 km, 25,200 km, respectively over the first three years. Suppose that, on 1 July 2021, the truck is sold for $135,000 in cash. Assuming the straight-line method is used, record the transaction in the general journal.
AU Removals’ financial year ends on 30 June each year. On 1 July 2019, AU Removals purchased a truck for $168,000. You are the accountant of the business and you have estimated that the truck is to last 15 years and to have $7,000 residual value at that point. As per the business plan, the truck can be used to drive 350,000 kilometres over the 15 years, with per-year projections of 21,000 km, 28,000 km, 25,200 km, respectively over the first three years. Suppose that, on 1 July 2021, the truck is sold for $135,000 in cash. Assuming the straight-line method is used, record the transaction in the general journal.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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AU Removals’ financial year ends on 30 June each year. On 1 July 2019, AU Removals purchased a truck for $168,000. You are the accountant of the business and you have estimated that the truck is to last 15 years and to have $7,000 residual value at that point. As per the business plan, the truck can be used to drive 350,000 kilometres over the 15 years, with per-year projections of 21,000 km, 28,000 km, 25,200 km, respectively over the first three years.
Suppose that, on 1 July 2021, the truck is sold for $135,000 in cash. Assuming the straight-line method is used, record the transaction in the general journal.
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