Question

Journal entry help for a paper-packaging company called Gravure Graphics International during 2018 and 2019.

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 $91,000 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 $34,000 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 $600 cash for minor repairs to the pickup truck's upholstery.
July		1		Paid $24,000 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 $29,000 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.)

• Record the purchase of storage shed components for $91,000.

• Record the payment of $2,000 to have the storage shed erected.

• Record the purchase of a pickup truck for $34,000.

• Record the repairs of $600 to the pickup truck.

• Record the purchase of a patent for $24,000 on a new paper bag manufacturing process.

• Record the depreciation and amortization expense on the pickup truck, storage shed and patent for the year.

• Record the depreciation for the truck up to the date of sale.

• Record the sale of the truck for $29,000 cash.

• Record the depreciation on the storage shed for the year.

• Record the Patent Amortization expense for the full year.

• Record the reversal of the accumulated amortization of patents.

• Record any impairment loss incurred on the patent.

Answer 1

Gravure Graphics International Journal Enteries Date Particulars 2.1.2018 Storage Shed a/c Dr. Debit in $ Credit in 91000 91000 To Cash (Storage Shed purchased) 3.1.2018 Dr. 2000 Storage Shed a/c To Cash (Storage shed erected) 2000 1.4.2018 Dr. 34000 Pickup Truck a/c To Cash (Pickup truck purchased) 34000 13.5.2018 Repair and maintenance a/c Dr. To Cash (Paid $600 cash for minor repairs) 600 1.7.2018 Dr. 24000 Patent a/c To Cash (purchase patent rights) 24000 25650 4650 18600 2400 31.12.2018 Depreciation & Amortization a/c Dr. To Pickup Truck To Storage Shed To Patent (To record depreciation) (91000 + 2000 ) X2/10 = 18600 (34000 - 3000 )/5 = 6200 x 9/12 = 4650 24000 / 5 = 4800 / 2 = 2400 3100 3100 30.6.2019 Depreciation & Amortization a/c Dr. To Pickup Truck (Record the depreciation for the truck up to the date of sale.) 3100 Profit and loss account a/c Dr. To Depreciation & Amortization 3100 Dr. 29000 Cash a/c To Pickup Truck To Profit and loss account (Sold the pickup truck) 26250 2750 19680 14880 4800 31.12.2019 Depreciation & Amortization a/c Dr. To Storage Shed To Patent (To record depreciation) (93000 - 18600) X 2/10 = 14880 (34000 - 3000 )/5 = 6200 31.12.2019 Impairment Loss a/c Dr. 16800 To Patent (Impairment loss ) 24000 - 4800 - 2400 = 16800 16800 36480 31.12.2019 Profit and loss account a/c Dr. To Depreciation & Amortization To Impairment Loss 19680 16800