Explanation Prepare journal entries to record the given transaction for 2016 as follows: Date Account Title and Explanation Post Ref. Debit ($) Credit ($) January 1, 2014 Trucks (1) 22,000 Cash 22,000 (To record the purchase of truck) Table (1) Truck is an asset account and it increases the value of asset. Therefore, debit Trucks account by $22,000. Cash is an asset account and it decreases the value of asset. Therefore, credit Cash account by $22,000. Date Account Title and Explanation Post Ref. Debit ($) Credit ($) December 31, 2014 Depreciation Expense (2) 4,000 Accumulated Depreciation – Trucks 4,000 (To record the depreciation expense for truck) Table (2) Description : Depreciation Expense is an expense account and it is increased by $4,000. Expenses are the component of stockholder’s Equity and it decreases the value of equity. Therefore, debit Depreciation Expenses account with $4,000. Accumulated Depreciation is a contra-asset account and would have a normal credit balance. Therefore, credit Accumulated Depreciation account with $4,000. Working Notes : Compute the acquisition cost of truck : Acquisition cost of Truck = Purchase value + Sales tax = $20,515 + $ 1,485 = $22,000 (1) Compute depreciation expense : Depreciation = [ Acquisition cost of Truck– Salvage value ] Useful life = $22,000 − $2,000 5 years = $4,000 (2) Prepare journal entries to record the given transaction for 2015 as follows: Date Account Title and Explanation Post Ref. Debit ($) Credit ($) December 31, 2015 Depreciation Expense (5) 5,200 Accumulated Depreciation – Trucks 5,200 (To record the depreciation expense for truck) Table (3) Description : Depreciation Expense is an expense account and it is increased by $5,200. Expenses are the component of stockholder’s Equity and it decreases the value of equity. Therefore, debit Depreciation Expenses account with $5,200. Accumulated Depreciation is a contra-asset account and would have a normal credit balance. Therefore, credit Accumulated Depreciation account with $5,200

5th Edition

ISBN: 9780078025754

Author: John Wild

Publisher: McGraw-Hill/Irwin

See similar textbooks

Concept explainers

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 exp…

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…

Videos

Question

Chapter 8, Problem 5AP

To determine

Prepare journal entries to record the given transaction and events.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 8, Problem 4AP

Chapter 8, Problem 6AP

Students have asked these similar questions

I am looking for help with this general accounting question using proper accounting standards.

Please explain this financial accounting problem by applying valid financial principles.

A company discarded a storage cabinet it had originally purchased for $14,500. The cabinet had $9,700 worth of accumulated depreciation. The company should recognize a (an): (a) $14,500 loss. (b) $0 gain or loss. (c) $9,700 loss. (d) $4,800 loss. (e) $4,800 gain.

Chapter 8 Solutions

Financial Accounting Fundamentals:

Ch. 8 - Prob. 1MCQ Ch. 8 - Prob. 2MCQ Ch. 8 - Prob. 3MCQ Ch. 8 - Prob. 4MCQ Ch. 8 - Prob. 5MCQ Ch. 8 - Prob. 1DQ Ch. 8 - Prob. 2DQ Ch. 8 - Prob. 3DQ Ch. 8 - Prob. 4DQ Ch. 8 - Prob. 5DQ

Ch. 8 - Prob. 6DQ Ch. 8 - Prob. 7DQ Ch. 8 - Prob. 8DQ Ch. 8 - Prob. 9DQ Ch. 8 - Prob. 10DQ Ch. 8 - Prob. 11DQ Ch. 8 - Prob. 12DQ Ch. 8 - Prob. 13DQ Ch. 8 - Prob. 14DQ Ch. 8 - Prob. 15DQ Ch. 8 - Prob. 16DQ Ch. 8 - Prob. 17DQ Ch. 8 - Prob. 18DQ Ch. 8 - Prob. 19DQ Ch. 8 - Prob. 20DQ Ch. 8 - Prob. 21DQ Ch. 8 - Prob. 1QS Ch. 8 - Prob. 2QS Ch. 8 - Prob. 3QS Ch. 8 - Prob. 4QS Ch. 8 - QS 8-5 Computing revised depreciation On January...Ch. 8 - Prob. 6QS Ch. 8 - Prob. 7QS Ch. 8 - Prob. 8QS Ch. 8 - Prob. 9QS Ch. 8 - Prob. 10QS Ch. 8 - QS 8-11 Classifying assets Identify the following...Ch. 8 - Prob. 12QS Ch. 8 - Prob. 13QS Ch. 8 - Prob. 14QS Ch. 8 - Prob. 15QS Ch. 8 - Prob. 1E Ch. 8 - Prob. 2E Ch. 8 - Prob. 3E Ch. 8 - Prob. 4E Ch. 8 - Prob. 5E Ch. 8 - Prob. 6E Ch. 8 - Exercise 8-7 Straight-line depreciation In early...Ch. 8 - Exercise 8-8 Double-declining-balance...Ch. 8 - Prob. 9E Ch. 8 - Exercise 8-10 Double-declining-balance...Ch. 8 - Prob. 11E Ch. 8 - Prob. 12E Ch. 8 - Prob. 13E Ch. 8 - Prob. 14E Ch. 8 - Prob. 15E Ch. 8 - Prob. 16E Ch. 8 - Prob. 17E Ch. 8 - Prob. 18E Ch. 8 - Prob. 19E Ch. 8 - Prob. 20E Ch. 8 - Prob. 21E Ch. 8 - Prob. 22E Ch. 8 - Prob. 23E Ch. 8 - Prob. 24E Ch. 8 - Prob. 25E Ch. 8 - PROBLEM SET A Problem 8-1A Plant asset costs;...Ch. 8 - Prob. 2AP Ch. 8 - Prob. 3AP Ch. 8 - Prob. 4AP Ch. 8 - Prob. 5AP Ch. 8 - Prob. 6AP Ch. 8 - Prob. 7AP Ch. 8 - Prob. 8AP Ch. 8 - Prob. 1BP Ch. 8 - Prob. 2BP Ch. 8 - Prob. 3BP Ch. 8 - Prob. 4BP Ch. 8 - Prob. 5BP Ch. 8 - Prob. 6BP Ch. 8 - Prob. 7BP Ch. 8 - Prob. 8BP Ch. 8 - Prob. 8SP Ch. 8 - Prob. 1BTN Ch. 8 - Prob. 2BTN Ch. 8 - Prob. 3BTN Ch. 8 - Prob. 7BTN Ch. 8 - Prob. 9BTN

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education

FINANCIAL ACCOUNTING

Accounting

ISBN:9781259964947

Author:Libby

Publisher:MCG

Accounting

ISBN:9781337272094

Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:Cengage Learning,

Accounting Information Systems

Accounting

ISBN:9781337619202

Author:Hall, James A.

Publisher:Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis...

Accounting

ISBN:9780134475585

Author:Srikant M. Datar, Madhav V. Rajan

Publisher:PEARSON

Intermediate Accounting

Accounting

ISBN:9781259722660

Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:9781259726705

Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:McGraw-Hill Education

SEE MORE TEXTBOOKS

Accounting for Derivatives_1.mp4; Author: DVRamanaXIMB;https://www.youtube.com/watch?v=kZky1jIiCN0;License: Standard Youtube License

Depreciation|(Concept and Methods); Author: easyCBSE commerce lectures;https://www.youtube.com/watch?v=w4lScJke6CA;License: Standard YouTube License, CC-BY