Xpress Delivery Service completed the following transactions and events involving the purchase and operation of equipment for its business. 20X0 Jan. 1 Paid $24,950 cash plus $1,950 in sales tax for a new delivery van that was estimated to have a five-year life and a $3,400 salvage value. Van costs are recorded in the Equipment account. Jan. 3 Paid $1,550 to install sorting racks in the van for more accurate and quicker delivery of packages. This increases the estimated salvage value of the van by another $200. Dec. 31 Recorded annual straight-line depreciation on the van. 20X1 Jan. 1 Paid $1,970 to overhaul the van’s engine, which increased the van’s estimated useful life by two years. May 10 Paid $600 to repair the van after the driver backed it into a loading dock. Dec. 31 Record annual straight-line depreciation on the van. (Round to the nearest dollar.) Required Prepare journal entries to record these transactions and events.
Xpress Delivery Service completed the following transactions and events involving the purchase and operation of equipment for its business. 20X0 Jan. 1 Paid $24,950 cash plus $1,950 in sales tax for a new delivery van that was estimated to have a five-year life and a $3,400 salvage value. Van costs are recorded in the Equipment account. Jan. 3 Paid $1,550 to install sorting racks in the van for more accurate and quicker delivery of packages. This increases the estimated salvage value of the van by another $200. Dec. 31 Recorded annual straight-line depreciation on the van. 20X1 Jan. 1 Paid $1,970 to overhaul the van’s engine, which increased the van’s estimated useful life by two years. May 10 Paid $600 to repair the van after the driver backed it into a loading dock. Dec. 31 Record annual straight-line depreciation on the van. (Round to the nearest dollar.) Required Prepare journal entries to record these transactions and events.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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 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.
Topic Video
Question
Xpress Delivery Service completed the following transactions and events involving the purchase and operation of equipment for its business.
20X0
Jan. 1 Paid $24,950 cash plus $1,950 in sales tax for a new delivery van that was estimated to have a five-year life and a $3,400 salvage value. Van costs are recorded in the Equipment account.
Jan. 3 Paid $1,550 to install sorting racks in the van for more accurate and quicker delivery of packages. This increases the estimated salvage value of the van by another $200.
Dec. 31 Recorded annual straight-line depreciation on the van.
20X1
Jan. 1 Paid $1,970 to overhaul the van’s engine, which increased the van’s estimated useful life by two years.
May 10 Paid $600 to repair the van after the driver backed it into a loading dock.
Dec. 31 Record annual straight-line depreciation on the van. (Round to the nearest dollar.)
Required
Prepare journal entries to record these transactions and events.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
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.Recommended textbooks for you
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,
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