Question

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

2016

Jan.		1		Paid $20,515 cash plus $1,635 in sales tax for a new delivery truck estimated to have a five-year life and a $2,150 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 $5,500 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.

Answer 1

total cost					22150
less Accumulated depreciation (2016)					4000
book value					18150
less revised salvage value					2,850
remaining cost to be depreciated					15,300
years of life remaining					3
total depreciation for 2016					5100
Depreciation expense (for 2016)					4000
Depreciation expense (for 2017)					5100
Depreciation expense (for 2018)					5100
Accumulated depreciation 12/31/2018					14200
book value of truck at 12/31/2018					7950
total cost					22150
Accumulated deprecciation					14,200
book value 12/31/2018					7950
loss on sale of truck (7950-5500)					2450
no	Date	General Journal				Debit	Credit
1	1/1/2016	Trucks				22,150
		cash					22,150
2	12/31/2016	Depreciation expense				4,000
		Accumulated depreciation					4000
3	12/31/2017	Depreciation expense				5,100
		Accumulated depreciation					5,100
4	12/31/2018	Depreciation expense				5,100
		Accumulated depreciation					5,100
5	12/31/2018	Cash				5,500
		Accumulated depreciation				14,200
		loss on sale of truck				2,450
		Truck					22,150