The Delivery Equipment account of Freedom Company showed the following details for 2022: Delivery Equipment 01.01.22 Balance 1,500,000 01.15 5,000 08.30 225,000 09.30 535,000 10.31 180,000 Your examination disclosed the following: a. The P5,000 charged to the Delivery Equipment account on January 15, 2022 represents payment of LTO registration fees for the company’s delivery equipment for the year 2022. b. The company bought a second-hand delivery truck on September 30 for P535,000, which includes P35,000 worth of comprehensive insurance for one year effective October 1, 2022. c. The company wrote-off a fully depreciated truck with an original cost of P225,000 on August 30; further verification disclosed that this truck is still being used by the company. d. The credit of P180,000 on October 31 represents proceeds from sale of one truck costing P350,000, which is 50% depreciated as of December 31, 2021. e. There is only one entry made to the Accumulated Depreciation account during 2022, a debit for P225,000 on August 30. f. There are no other delivery equipment that is fully depreciated. g. The company uses the straight-line method of depreciating their delivery equipment over a useful life of 5 years. A full year depreciation is given in the year of acquisition and none in the year of disposal. Requirement: a. Give all the necessary entries to correct the account on December 31, 2022. Write your entries in a columnar paper. b. Using a T-Account, show the corrected balance of the delivery equipment by posting your adjusting entries.
The Delivery Equipment account of Freedom Company showed the following details for 2022:
Delivery Equipment
01.01.22 Balance 1,500,000
01.15 5,000 08.30 225,000
09.30 535,000 10.31 180,000
Your examination disclosed the following:
a. The P5,000 charged to the Delivery Equipment account on January 15, 2022 represents payment
of LTO registration fees for the company’s delivery equipment for the year 2022.
b. The company bought a second-hand delivery truck on September 30 for P535,000, which
includes P35,000 worth of comprehensive insurance for one year effective October 1, 2022.
c. The company wrote-off a fully
further verification disclosed that this truck is still being used by the company.
d. The credit of P180,000 on October 31 represents proceeds from sale of one truck costing
P350,000, which is 50% depreciated as of December 31, 2021.
e. There is only one entry made to the
P225,000 on August 30.
f. There are no other delivery equipment that is fully depreciated.
g. The company uses the straight-line method of depreciating their delivery equipment over a
useful life of 5 years. A full year depreciation is given in the year of acquisition and none in the
year of disposal.
Requirement:
a. Give all the necessary entries to correct the account on December 31, 2022. Write your entries
in a columnar paper.
b. Using a T-Account, show the corrected balance of the delivery equipment by posting your
adjusting entries.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
