The following transactions and adjusting entries were completed by a local deliv

Question

The following transactions and adjusting entries were completed by a local delivery company called Fast Delivery. The company uses straight-line depreciation for delivery vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for franchise rights. Paid $173,000 cash to purchase a small warehouse building near the airport. The building has an estimated life of 20 years and a residual value of S3,300. Paid $38,000 cash to purchase a delivery van. The van has an estimated useful life of five years and a residual value of $7,600. January 2, 2015 July 1, 2015 October 2, 2015 Paid $300 cash to paint a small office in the warehouse building. October 13, 2015 Paid $100 cash to get the oil changed in the delivery van December 1, 2015 Paid $93,000 cash to UPS to begin operating Fast Delivery business as a December 31, 2015 June 30, 2016 December 31, 2016 franchise using the name The UPS Store. This franchise right expires in five years Recorded depreciation and amortization on the delivery van, warehouse building, and franchise right. Sold the warehouse building for $138,000 cash. (Record the depreciation on the building prior to recording its disposal.) Recorded depreciation on the delivery van and amortization on the franchise right. Determined that the franchise right was not impaired in value 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.) View transaction list Journal entry worksheet Record the sale of the warehouse building for $138,000 cash Note: Enter debits before credits. Date General Journal Debit Credit June 30, 2016 ash Depreciation-Building Loss on Disposal Buildings 173,000 Record entry Clear entry View generaljournal

Explanation / Answer

Cash 138000 Loss on Disposal 22273 Accumulated Depreciation 12728 Building 173000 (173000-3300/20)*1.5 Depreciation Expense Accumulated Depreciation-Van (=38000-7600)/20*2=3040 Amortization Expense 20150 Franchise 20150 93000/5=18600 18600/12=1550*13 months =20150

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