A truck was purchased on 1/01/11 for $32,000 Additionally, $1,000 was paid for p
ID: 2466287 • Letter: A
Question
A truck was purchased on 1/01/11 for $32,000 Additionally, $1,000 was paid for painting the company name on the side of the truck and $3,000 for a special protective bodliner to enable the truck to be used to deliver fragile Big Red statues to the customers. $700 was paid for annual licersing and $1,200 for a one-year insurance policy. List and total the expenditures that would go into the asset account, Truck (or Equipment), and be depreciated. Make the journal entry for the acquisition (purchase) of the truck on1/01/11. Which expenditure would be expensed immediately (debited into expense account) upon spending the money? Which expenditure would be put into a current asset account? A truck is determined to have an estimated 6-year useful life and an estimated salvage value of $2,000. Write the journal entery made on 12/31/11, 12/31/12, 12/31/13, and 12/31/14. Write only one of the identical 4 journal entries for the yearly depreciation expense. What depreciation method must you be using given that the entries are IDENTICAL for each full year? What is the book value of the equipment at 12/31/14? Shoe the work (break-down) The truck is sold on 7/01/15 for S15,000 Show the journal entry for SIX months of depreciation for 2015 Make the journal entry for the actual sale of the equipment on 7/01/15 for $9.000 cash^cumulated Depreciate will include depreciation for 2011, 2012. 2013. 2014 and the six months of 2015Explanation / Answer
1
Expenditure that would go into Asset account:
Purchase price
$ 32,000
Painting Costs
$ 1,000
Special Protection
$ 3,000
Total
$ 36,000
2
Journal Entry for Purchase of truck:
Date
Accounts Title / Explanation
Debit
Credit
1.01.11
Truck
$ 36,000
Cash
$ 36,000
(Being truck purchased and expenses incurred)
3
Expenditure to be expensed immediately :
Annual Licensing Expense
$ 700
Insurance Expense
$ 1,200
Total
$ 1,900
4
Insurance policy shall go to current assets as Prepaid Insurance
1
Expenditure that would go into Asset account:
Purchase price
$ 32,000
Painting Costs
$ 1,000
Special Protection
$ 3,000
Total
$ 36,000
2
Journal Entry for Purchase of truck:
Date
Accounts Title / Explanation
Debit
Credit
1.01.11
Truck
$ 36,000
Cash
$ 36,000
(Being truck purchased and expenses incurred)
3
Expenditure to be expensed immediately :
Annual Licensing Expense
$ 700
Insurance Expense
$ 1,200
Total
$ 1,900
4
Insurance policy shall go to current assets as Prepaid Insurance
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