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 $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 $40,000 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 $3,000. May 13 Paid $500 cash for minor repairs to the pickup truck's upholstery. July 1 Paid $29,000 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 $34,000 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.) View transaction list Journal entry worksheet < 1 7 ..... 8 9 10 11 12 > Record the Patent Amortization expense for the full year. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2019 5,800 5,800 Racord entre Clear entre Wineraliumnal

Answer 1

1. Journal Entries -

Journal Entries Accounts Title Debit Credit Date 2018 Jan 2 Equipment $ 86,000 Cash $ 86,000 (Being Storage Shed Components Purchased) Jan 3 Equipment $ 2,000 Cash (Being Amount paid to storage shed) $ 2,000 Apr 1 Equipment $ 40,000 Cash (Being Pick up truck purchased) $ 40,000 500 May 13 Repair Expenses $ Cash (Being normal Repairs Paid) $ 500 Jul 1 Patents $ 29,000 Cash (Being Patents Purchased) $ 29,000 Dec 31 Depreciation Expense $ 8,300 Accumulated Depreciation $ 8,300 (Being Depreciation Charged on Equipment) Dec 31 Depreciation Expense $ 5,550 Accumulated Depreciation $ 5,550 (Being Depreciation Charged on Equipment) Dec 31 Amortisation Expense $ 5,800 Accumulated Amortisation (Being Amortisation Expense incurred) $ 5,800 2019 June 30 Depreciation Expense $ 3,700 Accumulated Depreciation $ 3,700 (Being Depreciation Charged on Equipment) June 30 Cash $ 34,000 Accumulated Depreciation $ 9,250 Gain on Sale of Equipment Equipment (Being Equipment Sold) $ 3,250 $ 40,000 Dec 31 Depreciation Expense $ 8,300 Accumulated Depreciation $ 8,300 (Being Depreciation Charged on Equipment) Dec 31 Write off $ 23,200 Patents (Being Patents Write Off) $ 23,200