Question

On January 1, 2014, Red Rock Brewery purchased a van for $45,000. Red Rock expects the van to have a useful life of six years and a residual value of $9,000. The depreciation method used was straight-line. On December 31, 2017, the van was sold for $22,000 cash. 1. What was the carrying amount of the van at the date of sale? 2. Record the sale of the van on December 31, 2017 Requirement 1. What was the carrying amount of the van at the date of sale? (Round to the nearest whole dollar.) The carrying amount of the van at the date of sale was $ 1 Requirement 2. Record the sale of the van on December 31, 2017. (Record debits first, then credits. Explanations are not required.) Journal Entry Accounts Debit Credit Date

Answer 1

Annual Depreciation (Cost of Van Residual value)/Useful life Depreciation for 4 years from January 1, 2014 to December 31, 2017 6,000 ($45,000-$9,000)/6 years $ 24,000 ($6,000 4 years) Debit Credit Date Accounts 31-12-2017 Cash Carrying value on the date of sale 22,000 Accumulated Depreciation Cost of Van $ 45,000 $24,000 $ 24,000 (refer workings above) Depreciation for 4 years Carrying value on the date of sale Equipment-Van Gain on sale of equipment 45,000 $ 1,000 ($22,000- $21,000) $21,000