Question

Yoshi Company completed the following transactions and events involving its delivery trucks.

2016

Jan.		1		Paid $22,015 cash plus $1,485 in sales tax for a new delivery truck estimated to have a five-year life and a $2,000 salvage value. Delivery truck costs are recorded in the Trucks account.
Dec.		31		Recorded annual straight-line depreciation on the truck.

2017

Dec.

31

Due to new information obtained earlier in the year, the truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,850. Recorded annual straight-line depreciation on the truck.

2018

Dec.		31		Recorded annual straight-line depreciation on the truck.
Dec.		31		Sold the truck for $5,400 cash.

Required:

1-a. Calculate depreciation for year 2017.
1-b. Calculate book value and gain (loss) for sale of Truck on December, 2018.
1-c. Prepare journal entries to record these transactions and events.

Calculate depreciation for year 2017.

	Total cost Less accumulated depreciation (from 2016) Book value Less revised salvage value Remaining cost to be depreciated Years of life remaining Total depreciation for 2017

Calculate book value and gain (loss) for sale of Truck on December, 2018.

	Depreciation expense (for 2016) Depreciation expense (for 2017) Depreciation expense (for 2018) Accumulated depreciation 12/31/2018 0 Book value of truck at 12/31/2018 Total cost Accumulated depreciation Book value 12/31/2018

• 1

  Record the total cost of the new delivery truck.

• 2

  Record the year-end adjusting entry for the depreciation expense of the delivery truck.

• 3

  Record the year-end adjusting entry for the depreciation expense of the delivery truck.

• 4

  Record the year-end adjusting entry for the depreciation expense of the delivery truck.

• 5

  Record the sale of the delivery truck for $5,400 cash.

Answer 1

total cost					23500
less Accumulated depreciation (2015)					4300
book value					19200
less revised salvage value					2,850
remaining cost to be depreciated					16,350
years of life remaining					3
total depreciation for 2016					5450
Depreciation expense (for 2015)					4300
Depreciation expense (for 2016)					5450
Depreciation expense (for 2017)					5450
Accumulated depreciation 12/31/2017					15200
book value of truck at 12/31/2017					8300
total cost					23500
Accumulated deprecciation					15,200
book value 12/31/2017					8300
loss on sale of truck (8300-5400)					2900
no	Date	General Journal				Debit	Credit
1	1/1/2015	Trucks				23,500
		cash					23,500
2	12/31/2015	Depreciation expense				4,300
		Accumulated depreciation					4300
3	12/31/2016	Depreciation expense				5,450
		Accumulated depreciation					5,450
4	12/31/2017	Depreciation expense				5,450
		Accumulated depreciation					5,450
5	12/31/2017	Cash				5,400
		Accumulated depreciation				15,200
		loss on sale of truck				2,900
		Truck					23,500