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 Jan. 1 Paid $25,015 cash plus $1,485 in sales tax for a new delivery truck estimated to have a five-year life and a $2,150 salvage value. Delivery truck costs are recorded in the Trucks account. Dec. 31 Recorded annual straight-line depreciation on the truck. 2017 Dec. 31 Due to new information obtained earlier in the year, the truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,550. Recorded annual straight-line depreciation on the truck. 2018 Dec. 31 Recorded annual straight-line depreciation on the truck. Dec. 31 Sold the truck for $5,500 cash. 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.

Answer 1

total cost					26500
less Accumulated depreciation (2016)					4870
book value					21630
less revised salvage value					2,550
remaining cost to be depreciated					19,080
years of life remaining					3
total depreciation for 2016					6360
Depreciation expense (for 2016)					4870
Depreciation expense (for 2017)					6360
Depreciation expense (for 2018)					6360
Accumulated depreciation 12/31/2018					17590
book value of truck at 12/31/2018					8910
total cost					26500
Accumulated deprecciation					17,590
book value 12/31/2018					8910
loss on sale of truck (8910-5500)					3410
no	Date	General Journal				Debit	Credit
1	1/1/2016	Trucks				26,500
		cash					26,500
2	12/31/2016	Depreciation expense				4,870
		Accumulated depreciation					4870
3	12/31/2017	Depreciation expense				6,360
		Accumulated depreciation					6,360
4	12/31/2018	Depreciation expense				6,360
		Accumulated depreciation					6,360
5	12/31/2018	Cash				5,500
		Accumulated depreciation				17,590
		loss on sale of truck				3,410
		Truck					26,500