Question

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

2017

Jan.		1		Paid $25,015 cash plus $1,785 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.

2018

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 $2,550. Recorded annual straight-line depreciation on the truck.

2019

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 2018.
1-b. Calculate book value and gain (loss) for sale of Truck on December, 2019.
1-c. Prepare journal entries to record these transactions and events.

Calculate depreciation for year 2018.

	Total cost Less accumulated depreciation (from 2017) Book value Less revised salvage value Remaining cost to be depreciated Years of life remaining Total depreciation for 2018

Calculate book value and gain (loss) for sale of Truck on December, 2019.

	Depreciation expense (for 2017) Depreciation expense (for 2018) Depreciation expense (for 2019) Accumulated depreciation 12/31/2019 Book value of truck at 12/31/2019 Total cost Accumulated depreciation Book value 12/31/2019

Prepare journal entries to record these transactions and events.

Journal entry worksheet

• Record the total cost of the new delivery truck.

Note: Enter debits before credits.

	Date General Journal Debit Credit Jan 01, 2017

Answer 1

1

Date	General journal	Debit	Credit
2017
Jan. 1-2017	Trucks(25015+1785)	26,800
	Cash		26,800
Dec. 31-17	Depreciation expense—Trucks	4,930
	Accumulated depreciation—Truck		4,930
	(26800-2150) / 5

2

Date	General journal	Debit	Credit
Dec. 31-18	Depreciation expense—Trucks (W.N. 1)	6,440
	Accumulated depreciation—Trucks		6,440
Dec. 31-19	Depreciation expense—Trucks	5,200
	Accumulated depreciation—Trucks		5,200

Working note:1

Particulars	Amount
Total cost	26,800
Less accumulated depreciation (from 2017)	4,930
Book value	21,870
Less revised salvage value	2,550
Remaining cost to be depreciated	19,320
Years of life remaining	3
Total depreciation for 2018	6,440

3

Particulars	Amount
Depreciation expense (for 2017)	4,930
Depreciation expense (for 2019)	6,440
Depreciation expense (for 2019)	6,440
Accumulated depreciation 12/31/2019	17,810
Book value of truck at 12/31/2019
Total cost	26,800
Accumulated depreciation	-17,810
Book value 12/31/2019	8,990
Loss on sale of truck(8990-5400)	3,590

Date	General journal	Debit	Credit
Dec. 31-19	Cash	5,400
	Accumulated depreciation—Trucks	17,810
	Loss on disposal of trucks (W.N.: 2)	3,590
	Trucks		26,800