Question

Module 01 Problem: Purchases, Repairs, Depreciation and Disposal of Fixed Assets Prepare a depreciation schedule for three delivery vehicles. Assume all vehicles below are purchased between January 1 and January 5. #1 Van: January 1 purchased a used delivery van for $20,000. The residual value is $5,000 and the useful life is 3 years. Use straightline depreciation. Used Delivery Van Depreciation Accumulated Expense Depreciation Cost 20,000 $ 5,000 5,000 5,000 5,000 10,000 15,000 Book Value $ 20,000 15,000 10,000 5,000 #2 Van: January 3 purchased a new delivery van for $45,000. The residual value is $10,000 and the useful life is 5 years. Use double declining depreciation. New Delivery Van Depreciation Accumulated Expense Depreciation Year S Cost 45.000 S 2, 18,000 10,800 6,200 18,000 28,800 35,000 Book Value 45,000 27,000 16,200 10,000 #3 Van: January 4 purchased a third vehicle with special equipmen! installed to meet a client's needs for $60,000. It is estimated it will be driven 100,000 miles and have a residual value of $15,000. Use units of production depreciation method. 40,000 miles are driven the first year, 30,000 miles the second year, 20,000 miles the third year and 15,000 miles the fourth year. Special Equipped Van Depreciation Accumulated Expense Depreciation Year Cost 60,000 $ 18,000 13,500 9,000 6,750 18,000 31,500 40,500 47,250 Book Value 60,000 42,000 28,500 19,500 12,750

How did i solve this excel problem wrong? I added them all up at the end but did not get an equal result. Where did i messed up and how do i solve the problem?

Answer 1

Some of the entries were wrong.Here are the correct entries.

date	Particulars	debit($)	credit($)
01-Jul	depreciation expense a/c	2500
	accumulated depreciation a/c		2500
	cash a/c	10000
	accumulated depreciation	7500
	loss on sale a/c	2500
	delivery van a/c		20000
sep	van (new)	48000
	accumulated depreciation	30000
	notes payable		36000
	allowance on new van		5000
	equipment(old)		37000

In july

Depreciation on van is for 6 months =$5000 x 6/12 =$2500

loss on sale = $(20000 - 7500) - $10000 = $2500