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 $94,000 cash to purchase storage shed components. | ||
January | 3 | Paid $4,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $7,000. | ||
April | 1 | Paid $37,000 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 $5,000. | ||
May | 13 | Paid $300 cash for minor repairs to the pickup truck's upholstery. | ||
July | 1 | Paid $21,000 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 $31,000 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.)
No. | Date | General Journal | Debit | Credit |
1 | January 02, 2018 | Buildings | 94000 | |
Cash | 94000 | |||
(Storage shed components purchased for cash) | ||||
2 | January 03, 2018 | Buildings | 4000 | |
Cash | 4000 | |||
(Erection costs paid in cash) | ||||
3 | April 01, 2018 | Equipment | 37000 | |
Cash | 37000 | |||
(Pickup truck purchased for cash) | ||||
4 | May 13, 2018 | Repairs and maintenance expense | 300 | |
Cash | 300 | |||
(Repairs to pickup truck paid in cash) | ||||
5 | July 01, 2018 | Patent | 21000 | |
Cash | 21000 | |||
(Purchase of patents for cash) | ||||
6 | December 31, 2018 | Depreciation expense | 24400 | |
Amortization expense ($21000/5 years x 6/12) | 2100 | |||
Accumulated depreciation-Building | 19600 | |||
Accumulated depreciation-Equipment | 4800 | |||
Accumulated amortization-Patent | 2100 | |||
(Depreciation and amortization expense for the year) | ||||
7 | June 30, 2019 | Depreciation expense | 3200 | |
Accumulated depreciation-Equipment | 3200 | |||
(Depreciation expense on truck) | ||||
8 | June 30, 2019 | Cash | 31000 | |
Accumulated depreciation-Equipment | 8000 | |||
Equipment | 37000 | |||
Gain on disposal | 2000 | |||
(Sale of truck for cash) | ||||
9 | December 31, 2019 | Depreciation expense | 15680 | |
Accumulated depreciation-Building | 15680 | |||
(Depreciation expense on building) | ||||
10 | December 31, 2019 | Impairment loss | 18900 | |
Patent | 18900 | |||
(Loss on impairment of patent) |
Workings:
Straight-line depreciation on truck:
Annual depreciation = (Cost - Salvage value)/Estimated useful life = ($37000 - $5000)/5 years = $32000/5 = $6400
2018 depreciation for 9 months = $6400 x 9/12 = $4800
2019 depreciation for 6 months = $6400 x 6/12 = $3200
Double-declining depreciation on storage shed (Building):
Straight-line annual depreciation rate = 100%/Estimated useful life = 100%/10 years = 10%
DDB rate = 2 x 10% = 20%
Year | Book Value Beginning of Year | x | Depreciation Rate | = | Annual Depreciation Expense | End of Year | |
Accumulated Depreciation | Book Value | ||||||
2018 | 98000 | 20% | 19600 | 19600 | 78400 | ||
2019 | 78400 | 20% | 15680 | 35280 | 62720 |
The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International...
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 $88,000 cash to purchase storage shed components. January 3 Paid $4,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $7,000. April 1 Paid...
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 $96,000 cash to purchase storage shed components. January 3 Paid $6,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $9,000. April 1 Paid...
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 $90,000 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...
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 $101,000 cash to purchase storage shed components. January 3 Paid $6,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $9,000. April 1 Paid...
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 $101,000 cash to purchase storage shed components. January 3 Paid $6,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $9,000. April 1 Paid...
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 $86,000 cash to purchase storage shed components. January 3 Paid $2,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $5,000. April 1 Paid...
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 $95,000 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 $10,000. April 1 Paid...
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 $92,000 cash to purchase storage shed components. January 3 Paid $4,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $7,000. April 1...
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 $93,000 cash to purchase storage shed components. January 3 Paid $4,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $7.000 April 1 Paid...
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 $86,000 cash to purchase storage shed components. January 3 Paid $2,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $5,000. April 1 Paid...