The following transactions and adjusting entries were completed by a local delivery company called Fast Delivery. The company uses straight-line depreciation for delivery vehicles, double-declining- balance depreciation for buildings, and straight-line amortization for franchise rights. January 2, 2020 Paid $173,000 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, 300. July 1, 2020 Paid $38,000 cash to purchase a delivery van. The van has an estimated useful life of five years and a residual value of $7,600. October 2, 2020 Paid $300 cash to paint a small office in the warehouse building. October 13, 2020 Paid $100 cash to get the oil changed in the delivery van. December 1, 2020 Paid $93,000 cash to UPS to begin operating Fast Delivery business as a franchise using the name The UPS Store. This franchise right expires in five years. December 31, 2020 Recorded depreciation and amortization on the delivery van, warehouse building, and franchise right. June 30, 2021 Sold the warehouse building for $138,000 cash. (Record the recording its disposal.) December 31, 2021 Recorded depreciation on the delivery van and amortization on the depreciation on the building prior franchise right. Determined that the franchise right was not impaired in value. Required: Prepare the journal entries required on each of the above dates. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
The following transactions and adjusting entries were completed by a local delivery company called Fast Delivery. The company uses straight-line depreciation for delivery vehicles, double-declining- balance depreciation for buildings, and straight-line amortization for franchise rights. January 2, 2020 Paid $173,000 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, 300. July 1, 2020 Paid $38,000 cash to purchase a delivery van. The van has an estimated useful life of five years and a residual value of $7,600. October 2, 2020 Paid $300 cash to paint a small office in the warehouse building. October 13, 2020 Paid $100 cash to get the oil changed in the delivery van. December 1, 2020 Paid $93,000 cash to UPS to begin operating Fast Delivery business as a franchise using the name The UPS Store. This franchise right expires in five years. December 31, 2020 Recorded depreciation and amortization on the delivery van, warehouse building, and franchise right. June 30, 2021 Sold the warehouse building for $138,000 cash. (Record the recording its disposal.) December 31, 2021 Recorded depreciation on the delivery van and amortization on the depreciation on the building prior franchise right. Determined that the franchise right was not impaired in value. Required: Prepare the journal entries required on each of the above dates. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:The following transactions and adjusting entries were completed by a local delivery company called
Fast Delivery. The company uses straight-line depreciation for delivery vehicles, double-declining-
balance depreciation for buildings, and straight-line amortization for franchise rights.
January 2, 2020 Paid $173,000 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, 300.
July 1, 2020 Paid $38,000 cash to purchase a delivery van. The van has an
estimated useful life of five years and a residual value of $7,600.
October 2, 2020 Paid $300 cash to paint a small office in the warehouse building.
October 13, 2020 Paid $100 cash to get the oil changed in the delivery van.
December 1, 2020 Paid $93,000 cash to UPS to begin operating Fast Delivery business
as a franchise using the name The UPS Store. This franchise right
expires in five years.
December 31, 2020 Recorded depreciation and amortization on the delivery van,
warehouse building, and franchise right.
June 30, 2021 Sold the warehouse building for $138,000 cash. (Record the
recording its disposal.)
December 31, 2021 Recorded depreciation on the delivery van and amortization on the
depreciation on the building prior
franchise right. Determined that the franchise right was not
impaired in value.
Required:
Prepare the journal entries required on each of the above dates. (If no entry is required for a
transaction/event, select "No Journal Entry Required" in the first account field. Do not round
intermediate calculations.)
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