Year 1 Jan. 4 Nov. 2. Dec. 31. Year 2 Jan. 6. Apr. 1 June 11. Dec. 31. Purchased a used delivery truck for $32,000, paying cash. Paid garage $950 for miscellaneous repairs to the truck. Year 3 July 1 Oct, 2. Recorded depreciation on the truck for the year. The estimated useful life of the track is 4 years, with a residual value of $2,000 for the truck Purchased a new truck for $80,000, paying cash Sold the used truck for $16,000. (Record depreciation to date in Year 2 for the truck) Paid garage $310 for miscellaneous repairs to the truck. Record depreciation for the new truck. It has an estimated residual value of $7,000 and an estimated life of 5 years. Dec. 31. Purchased a new truck for $85,000, paying cash Sold the truck purchased January 6, Year 2, for $18.250. (Record depreciation to date for Year 3 for the truck) Recorded depreciation on the remaining truck. It has an estimated residual value of $6,000 and an estimated useful We of 8 years. Required: Journalize the transactions and the adjusting entries
Year 1 Jan. 4 Nov. 2. Dec. 31. Year 2 Jan. 6. Apr. 1 June 11. Dec. 31. Purchased a used delivery truck for $32,000, paying cash. Paid garage $950 for miscellaneous repairs to the truck. Year 3 July 1 Oct, 2. Recorded depreciation on the truck for the year. The estimated useful life of the track is 4 years, with a residual value of $2,000 for the truck Purchased a new truck for $80,000, paying cash Sold the used truck for $16,000. (Record depreciation to date in Year 2 for the truck) Paid garage $310 for miscellaneous repairs to the truck. Record depreciation for the new truck. It has an estimated residual value of $7,000 and an estimated life of 5 years. Dec. 31. Purchased a new truck for $85,000, paying cash Sold the truck purchased January 6, Year 2, for $18.250. (Record depreciation to date for Year 3 for the truck) Recorded depreciation on the remaining truck. It has an estimated residual value of $6,000 and an estimated useful We of 8 years. Required: Journalize the transactions and the adjusting entries
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:Year 1
Jan. 4
Nov. 2.
Dec. 31.
Year 2
Jan. 6.
Apr. 1.
June 11.
Dec. 31.
Purchased a used delivery truck for $32,000, paying cash
Paid garage $950 for miscellaneous repairs to the truck.
Recorded depreciation on the truck for the year. The estimated useful life of the truck is 4 years, with a
residual value of $2,000 for the truck
Year 3
July 1
Oct, 2.
Purchased a new truck for $80,000, paying cash
Sold the used truck for $16,000. (Record depreciation to date in Year 2 for the truck)
Paid garage $310 for miscellaneous repairs to the truck.
Record depreciation for the new truck. It has an estimated residual value of $7,000 and an estimated
site of 5 years.
Dec. 31.
Purchased a new truck for $85,000, paying cash
Sold the truck purchased January 6, Year 2, for $18.250. (Record depreciation to date for Year 3 for the
truck)
Recorded depreciation on the remaining truck. It has an estimated residual value of $6,000 and an
estimated useful We of 8 years.
Required:
Journalize the transactions and the adjusting entries
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