Your business operates on January 1 to December 31 calendar year basis. On April 1, 2020 you purchased a new delivery truck for your business. The truck was imported from India. The price of the truck is $50,000. Other costs related to truck are as follows: insurance during transporatation $2,000, painting and lettering your company logo $500, one year road insurance $1,000, sales taxes and fees $2,500, oil and lubricants for the truck $500, import taxes $5,000. The truck's estimated useful life is 5 years and you expect that the salvage value of the truck will be $1,000. Your task: a. Using the double declining method, prepare a full depreciation schedule for the truck. b. Assume that on December 31, 2023, you sell this truck for $12,000. Prepare a journal entry for this sale. C. Assume on December 31, 2022 the truck is destroyed in an accident and have to be disposed with no salvage. Prepare a journal entry for the disposal.
Your business operates on January 1 to December 31 calendar year basis. On April 1, 2020 you purchased a new delivery truck for your business. The truck was imported from India. The price of the truck is $50,000. Other costs related to truck are as follows: insurance during transporatation $2,000, painting and lettering your company logo $500, one year road insurance $1,000, sales taxes and fees $2,500, oil and lubricants for the truck $500, import taxes $5,000. The truck's estimated useful life is 5 years and you expect that the salvage value of the truck will be $1,000. Your task: a. Using the double declining method, prepare a full depreciation schedule for the truck. b. Assume that on December 31, 2023, you sell this truck for $12,000. Prepare a journal entry for this sale. C. Assume on December 31, 2022 the truck is destroyed in an accident and have to be disposed with no salvage. Prepare a journal entry for the disposal.
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 9EB: Ronson recently purchased a new boat to help ship product overseas. The following information is...
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Transcribed Image Text:Your business operates on January 1 to December 31
calendar year basis.
On April 1, 2020 you purchased a new delivery truck for
your business. The truck was imported from India. The
price of the truck is $50,000.
Other costs related to truck are as follows: insurance
during transporatation $2,000, painting and lettering your
company logo $500, one year road insurance $1,000, sales
taxes and fees $2,500, oil and lubricants for the truck
$500, import taxes $5,000.
The truck's estimated useful life is 5 years and you expect
that the salvage value of the truck will be $1,000.
Your task:
a. Using the double declining method, prepare a full
depreciation schedule for the truck.
b. Assume that on December 31, 2023, you sell this truck
for $12,000. Prepare a journal entry for this sale.
C. Assume on December 31, 2022 the truck is destroyed in
an accident and have to be disposed with no salvage.
Prepare a journal entry for the disposal.
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