Question

The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International during 2018 and 2019. The company uses straight-line depreciation for trucks and other vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for patents. 2018 January 2 Paid $85,000 cash to purchase storage shed components. January 3 Paid $5,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $8,000. April 1 Paid $41,000 cash to purchase a pickup truck for use in the business. The truck has an estimated useful life of five years and a residual value of $6,000. May 13 Paid $600 cash for minor repairs to the pickup truck's upholstery. July 1 Paid $30,000 cash to purchase patent rights on a new paper bag manufacturing process. The patent is estimated to have a remaining useful life of five years. December 31 Recorded depreciation and amortization on the pickup truck, storage shed, and patent. 2019 June 30 Sold the pickup truck for $35,000 cash. (Record the depreciation on the truck prior to recording its disposal.) December 31 Recorded depreciation on the storage shed. Also determined that the patent was impaired and wrote off its remaining book value (i.e., wrote down the book value to zero). Required: Prepare the journal entries required on each of the above dates. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
How to finish 6,8,9,10,11,12 journal entries?

Answer 1

Straight Line Depreciation (Initial Cost- Salvage Value)/Useful Life Double Declining Balance 2/Useful Life x Book Value Salvage Cost Useful Life Particulars Storage Building Truck Patent $90,000 $41,000 $30,000 $8,000 $6,000 10 5 5 Date of Cost/Opening No of Closing Book Purchase/ Capitalisation Depreciation/Amortisation Particulars Year From Book value Months Value 2018 Storage Building 2019 Storage Building 12 [2/10 x $90000] 12 [2/10 x $72000] 9 [($41000- $6000)/5)/12*9] 6 [($41000 $6000)/5)/12*6] 6 [($30000/5)/12 6] 12 [($30000/5)] 3-Jan-18 $90,000 $72,000 $41,000 $35,750 $30,000 $18,000 $72,000 3-Jan-18 31-Dec-18 3-Jan-18 1-Apr-18 $14,400 $5,250 $3,500 $3,000 $57,600 31-Dec-19 1-Jan-19 1-Apr-18 $35,750 2018 Truck 31-Dec-18 2019 Truck 2018 Patent $32,250 1-Apr-18 1-Jan-19 30-Jun-19 1-Jul-18 1-Jan-19 31-Dec-18 31-Dec-19 $27,000 $21,000 1-Jul-18 2019 Patent 1-Jul-18 $27,000 $6,000 Depreciation/Amortisation is provided for proportionate year where it has been used for part of the year. Journal Entry Date 2-Jan-18 Building Particulars Credit Debit $85,000 Cash (To Record payment made for Storage shed Component) $85,000 3-Jan-18 Building $5,000 2 Cash To Record payment made for erection of Storage Building) $5,000 1-Apr-18 Truck Cash $41,000 3 $41,000 To Record purchase of truck) 13-May-18 Repairs and Maintenance $600 4 Cash $600 (To Record repairs and maintenance expense) 1-Jul-18 Patent $30,000 5 Cash To Record purchase of patent) $30,000

31-Dec-18 Depreciation- Building 61 $18,000 Depreciation- Truck Amortisation Patent Accumulated Depreciation - Building Accumulated Depreciation Truck Accumulated Amortisation - Patent To Record depreciation / amortisation for the year) $5,250 $3,000 $18,000 $5,250 $3,000 30-Jun-19 Depreciation- Truck $3,500 Accumulated Depreciation- Truck To Record depreciation on truck on sale of truck) $3,500 30-Jun-19 Accumulated Depreciation Truck $8,750 $39,000 8 Cash Truck $41,000 Gain on Sale of Assets To Record gain on sale of truck) $6,750 31-Dec-19 Depreciation- Building $14,400 9 Accumulated Depreciation Building To Record depreciation for the year) $14,400 31-Dec-19 Amortisation Patent $6,000 10 Accumulated Depreciation Patent To Record amortisation for the year) 31-Dec-19 Accumulated Depreciation Patent $6,000 $9,000 11 Patent $9,000 (To Record reversal of accumulated amortisation) 31-Dec-19 Impairment Loss Patent $21,000 12 $21,000 To Record impairment loss of patent)