entries are in General Jornal Format The following transactions and adjusting en
ID: 2400612 • Letter: E
Question
entries are in General Jornal Format
The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International during 2015 and 2016. The company uses straight-line depreciation for trucks and other vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for patents 9 January January Paid $102,000 cash to purchase storage shed components Paid $4,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $7,000 Paid $48,000 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 $5,000 Paid $600 cash for repairs to the pickup truck. Paid $13,000 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 Recorded depreciation and amortization on the pickup truck, storage shed, and patent. 2, 2015 3, 2015 1, 2015 13, 2015 8 May 1, 2015 December 31, 2015 June 30, 2016 Sold the pickup truck for $41,000 cash. (Record the depreciation on the truck prior to recording its disposal.) Recorded depreciation on the storage shed. Determined that the patent was impaired and wrote off its remaining book value (i.e., wrote down the book value to zero December 31, 2016 Required Prepare the journal entries required on each of the above dates. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.) 0Explanation / Answer
SOLUTION
Date Account titles and Explanation Debit ($) Credit ($) 2015 Jan.2 Buildings 102,000 Cash 102,000 Jan.3 Buildings 4,000 Cash 4,000 April 1 Equipment 48,000 Cash 48,000 May 13 Repairs Expense 600 Cash 600 July 1 Patents 13,000 Cash 13,000 Dec.31 Depreciation expense 27,650 Amortization expense 1,300 Accumulated depreciation-Building (106,000*100/10*1/100*2) 21,200 Accumulated depreciation-Equipment [(48,000-5,000)/5*9/12] 6,450 Accumulated amortizaton-Patents (13,000/5)*6/12 1,300 2016 June30 Depreciation expense 4,300 Accumulated depreciation-Equipment [(48,000-5,000)/5*6/12] 4,300 Cash 41,000 Accumulated depreciation-Equipment ($6,450+$4,300) 10,750 Equipment 48,000 Gain on disposal 3,750 Dec.31 Depreciation expense 16,960 Accumulated depreciation-Building [(106,000-21,200)*100/10*1/100*2] 16,960 Impairment loss 11,700 Accumulated depreciation-Patents 1,300 Patents 13,000Related Questions
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