Question

Journal Entries for Plant Assets Stellar Delivery Service had the following transactions related to its delivery truck: Year 1 Mar. 1 Purchased for $32,500 cash a new delivery truck with an estimated useful life of five years and a $6,850 salvage value. Mar. 2 Paid $600 for painting the company name and logo on the truck. Dec. 31 Recorded depreciation on the truck for the year. Year 2 July 1 Installed air conditioning in the truck at a cost of $1,808 cash. Although the truck's estimated useful life was unaffected, its estimated salvage value was increased by $400. Sept7 Paid $450 for truck tune-up and safety inspection. Dec. 31 Recorded depreciation on the truck for the year. Year 3 Sept 3 Installed a set of front and rear bumper guards at a cost of $145 cash. Dec. 31 Recorded depreciation on the truck for the year. Year 4 Dec. 31 Recorded depreciation on the truck for the year. Stellar's depreciation policies include (1) using straight-line depreciation, (2) recording depreciation to the nearest whole month, and (3) expensing all truck expenditures of $150 or less. Required Prepare journal entries to record these transactions and adjustments. Round answers to the nearest whole number, when appropriate. Year 1 Year 2 Year 3 Year 4 General Journal Description Date Debit Credit YEAR 1 Mar. 5

Answer 1

Date	Description	Debit Amount ($)	Credit Amount ($)	Expalnation
Mar,01	Delivery Truck A/c               Dr                   To Cash A/c	32500	32500	To record Truck Purchase
Mar,02	Delivery Truck A/c               Dr                   To Cash A/c	600	600	To record truck related expenses for its intended use
Dec,31	Depreciation expense – Delivery Truck A/c           Dr         To Accumulated Depreciation – Delivery truck A/c	4375	4375	To record depreciation expense
Year - 2
July,1	Delivery Truck A/c               Dr                   To Cash A/c	1808	1808	To record cost of air conditioning
Sept,7	Truck Repairs & Maintenance Expenses A/c   Dr                    To Cash A/c	450	450	To record tune up and safety inspection cost
Dec,31	Depreciation expense – Delivery Truck A/c           Dr         To Accumulated Depreciation – Delivery truck A/c	5351	5351	To record depreciation expense
Year - 3
Sept,3	Truck Repairs & Maintenance Expenses A/c   Dr                    To Cash A/c	145	145	To record bumper guard expenses
Dec,31	Depreciation expense – Delivery Truck A/c           Dr         To Accumulated Depreciation – Delivery truck A/c	5532	5532	To record depreciation expense
Year - 4
Dec,31	Depreciation expense – Delivery Truck A/c           Dr         To Accumulated Depreciation – Delivery truck A/c	5532	5532	To record depreciation expense

Depreciation :

		Asset Value - a	Asset Salvage Value - b	Asset Life (months)- c	Amount to be depreciated d = (a-b)	Depreciation Per month     e = (d/c)	No. of months to be depreciated -f	Depreciation for the year (e*f)
	Y-1	32500
		600
		33100	6850	60	26250	437.5	10	4375
	Y-2	33100	7250	60	25850	431	12	5170
		1808		60	1808	30	6	180.8
		34908	7250	60	27658	461		5350.8
	Y-3	34908	7250	60	27658	461	12	5531.6
	Y-4	34908	7250	60	27658	461	12	5531.6

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