Problem 8-5A Computing and revising depreciation; selling plant assets LO C2, P1

Question

Problem 8-5A Computing and revising depreciation; selling plant assets LO C2, P1, P2

Yoshi Company completed the following transactions and events involving its delivery trucks.

2016

2017

2018

Required:

1-a. Calculate depreciation for year 2017.
1-b. Calculate book value and gain (loss) for sale of Truck on December, 2018.
1-c. Prepare journal entries to record these transactions and events.

Jan. 1 Paid $20,515 cash plus $1,935 in sales tax for a new delivery truck estimated to have a five-year life and a $2,300 salvage value. Delivery truck costs are recorded in the Trucks account. Dec. 31 Recorded annual straight-line depreciation on the truck. Required 1A Required 1BRequired 1C Calculate book value and gain (loss) for sale of Truck on December, 2 Depreciation expense (for 2016) Depreciation expense (for 2017) Depreciation expense (for 2018) Accumulated depreciation 12/31/2018 Book value of truck at 12/31/2018 Total cost Accumulated depreciation Book value 12/31/2018

Explanation / Answer

1-a. Depreciation for year 2017.

1-b. Calculation of book value and gain (loss) for sale of Truck

1-c. Journal Entries

Truck A/c Dr.

To Cash A/c

Depreciation A/c Dr.

To Truck A/c

Depreciation A/c Dr.

To Truck A/c

Depreciation A/c Dr.

To Truck A/c

Cash A/c Dr.

Profit & Loss A/c Dr.

To Truck A/c

5500

2540

8040

Particulars Amount $ Total Cost ($20515 + $1935) $22450 Less accumulated depreciation from 2016 (($22450-$2300)/5yrs) ($4030) Book Value $18420 Less revised salvage value $2850 Remaining cost to be depreciated $15570 Years of life remaining 3 Total Depreciation for 2017 $5190

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