The following transactions and adjusting entries were completed by a paper-packa

Question

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.

Paid $93,000 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 $36,000 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 $22,000 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.

Sold the pickup truck for $31,000 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).

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.)

1. Record the purchase of storage shed components for $93,000.

2. Record the payment of $4,000 to have the storage shed erected.

3. Record the purchase of a pickup truck for $36,000.

4. Record the repairs of $400 to the pickup truck.

5. Record the purchase of a patent for $22,000 on a new paper bag manufacturing process.

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

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

8. Record the sale of the pickup truck for $31,000 cash.

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

10. Record any impairment loss incurred on the patent.

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.

Explanation / Answer

Date Accounts Title Dr Cr Jan 2 2015 Building/Shed $93,000 1 Cash $93,000 3-Jan Building/Shed $4,000 2 Cash $4,000 1-Apr Truck $36,000 3 Cash $36,000 13-May Repir & Maintanance expenses $36,000 4 cash $36,000 1-Jul Patent $22,000 5 Cash $22,000 31-Dec Depreciation expenses $13,650 6 Accumulated Dep-Truck (36000-5000)/60*9 4650 Accumulated Dep-Building (93000+4000-7000)/10 years 9000 Amortization expenses $2,200 Accumulated Amotization-Patent (22000/60)*6 $2,200 Jun 30 2016 Depreciation expenses $3,100 7 Accumulated Dep-Truck (36000-5000)/60*6 3100 8 Cash 31000 Accumulated Dep-Truck $7,750 Gain on sale of Truck $2,750 Truck 36000 31-Dec Depreciation expenses $9,000 9 Accumulated Dep-Building 9000 10 Amortization expenses 19800 Accumulated Amotization-Patent 19800 Instead of Accumulated Amotization-Patent we can also use Patent account

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.