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 $97,000 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 $43,000 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 $700 cash for repairs to the pickup truck. Paid $18,000 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 $37,000 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 January January 2, 2015 3, 2015 1, 2015 13, 2015 April May July 1, 2015 December 31, 2015 June30, 2016 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.) View transaction list Journal entry worksheet 2 3 4 9 10> Record the purchase of storage shed components for $97,000 Note: Enter debits before credits Date General Journal Debit Credit January 02, 2015 Buildings 97,000 Cash 97,000

Explanation / Answer

Journal entries in the books of Gravure graphics international Date Particulars Debit Credit Jan 02, 2015 Storage shed a/c. 97000 To Cash 97000 (being Asset purchased) Jan 03, 2015 Storage shed a/c. 4000 To Cash 4000 (Being Erection capitalized) Apr 01, 2015 Truck A/c. 43000 To Cash 43000 (being Asset purchased) May 13, 2015 Repairs to truck a/c. 700 To Cash 700 (Being repair cost incurred) July 1, 2015 Patents A/c. 18000 To Cash 18000 (being Asset purchased) Dec 31, 2015 Deprecation for Storage shed 18800 ((97000+4000)-7000)/10*2 Deprecation for Truck 5700 (43000-5000)/5*9/12 Amortization for patents 1800 (18000)/5*6/12 To Accumulated dep a/c 26300 June 30, 2016 Deprecation for Storage shed 8220 ((97000+4000)-18800)*20%*6/12 To Accumulated dep a/c 8220 June 30, 2016 Cash a/c 37000 Accumulated dep a/c 27020 Loss on sale of 36980 To Storage shed a/c. 101000 Dec 31, 2016 Deprecation for Truck 7600 (43000-5000)/5 To Accumulated dep a/c 7600 Dec 31, 2016 Impairment of patent a/c. 12600 Amortization for patents 3600 (18000)/5 To Patents a/c. 16200

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