Tony and Suzie see the need for a rugged all-terraln vehicle to transport partic
ID: 2424382 • Letter: T
Question
Tony and Suzie see the need for a rugged all-terraln vehicle to transport participants and supplies. They declde to purchase a used Suburban. The cost of the Suburban is $11,600. The vehlcle is purchased In late June and will be put Into use on July 1, 2016. Annual Insurance from GEICO runs $1,750 per year. The palnt Is starting to fade, so they spend an extra $2,900 to repaint the vehicle, placing the Great Adventures logo on the front hood, back, and both sldes. An additlonal $1,900 Is spent on a deluxe roof rack and a traller hltch. The palnting, roof rack, and hitch are all expected to Increase the future benefits of the vehicle for Great Adventures. They expect to use the Suburban for flive years and then sell the vehicle for $4,400.Explanation / Answer
Journal entry july 1 2018
Cash account ...............Dr 9700
Loss On sale ...............Dr 1900
To Equipment 11600
( Being equipment sold for a loss )
Year Depreciation expense Accumulated depreciation Book Value 1 2400 0 14000 2 2400 2400 11600 3 2400 4800 9200 4 2400 7200 6800 5 2400 9600 4400