Ch 10 HVw The following t is used Jan, 8 Purchased a used delivery truck for $24

Question

Ch 10 HVw The following t is used Jan, 8 Purchased a used delivery truck for $24,000, paying cash. Mar. 7 Paid garage $900 for changing the oil, replacing the oll fiter, and tuning the engine on the delivery truck Dec31 Recorded depmeation Cn the truck for the nscal year. The estimated useful Sfe of truck is four years, with a residual value of $4,000 for the truck an.9 Purchased a new truck for $50,000, paying cash Feb. 28 Paid garage $250 to tune the engine and make other minor repairs on the used truck Apr 30 Sold the used truck for $9,500. (Record depreciation to date in Year 2 for the truck.) Dec. 31 Record depreciation for the newd truck. it has an estimated residua value of $12,000 and an estimated ife of eight years Year 3 Sept. 1 Purchased a new truck for $58,500, paying cash Sept. 4 Seld the truck purchased January 9, Year 2, for $36,000.(Record depreciation to date for Year 3 for the truck.) Dec. 31 Recorded depreclation on the fe of 10 years Deck My Werk4 moeyrt eraning

Explanation / Answer

Year 1 Jan-08 Delivery Truck 24000 Cash 24000 Mar-07 Truck Repair Expense 900 Cash 900 Dec-31 Depreciation Expense - Delivery Truck 12000 Acccumulated Depreciation - Delivery Truck 12000 Year 2 Jan-09 Delivery Truck 50000 Cash 50000 Feb-28 Truck Repair Expense 250 Cash 250 Apr-30 Depreciation Expense - Delivery Truck* 2000 Acccumulated Depreciation - Delivery Truck 2000 * Depreciation = Opening WDV*Rate of Depreciation*4/12          = 12000*50%*4/12          = 2000 Apr-30 Acccumulated Depreciation - Delivery Truck 14000 Cash 9500 Loss on sale of Delivery Truck* 500 Delivery Truck 24000 (Loss = Cost-Accumulated Depreciation-sale price= 24000-14000-9500 = 500 Dec-31 Depreciation Expense - Delivery Truck 12500 Acccumulated Depreciation - Delivery Truck 12500 Year 3 Sep-01 Delivery Truck 58500 Cash 58500 Sep-04 Depreciation Expense - Delivery Truck* 6250 Acccumulated Depreciation - Delivery Truck 6250 * Depreciation = Opening WDV*Rate of Depreciation*8/12          = 37500*25%*8/12          = 6250 Sep-04 Acccumulated Depreciation - Delivery Truck 18750 Cash 36000 Delivery Truck 24000 Profit on sale of Delivery Truck* 4750 (Profit = Accumulated Depreciation+sale price-cost= 18750+36000-50000 = 4750 Dec-31 Depreciation Expense - Delivery Truck 3900 Acccumulated Depreciation - Delivery Truck 3900

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