Question

In: Accounting

The Parker Piano Company purchased a Delivery Truck on January 1, 2025 for $50,000 which included...

The Parker Piano Company purchased a Delivery Truck on January 1, 2025 for $50,000 which included all costs to get the asset ready for use. The truck has an anticipated life of 100,000 miles or 4 years. The estimated residual value at the end of the assets service life is expected to be $2,000. For assets of this type, the company utilizes the straight-line depreciation method.

  1. Record the purchase of the asset.

Date

Account Name

Debit

Credit

  1. Complete the depreciation table below.

Period Ended

Depreciation Expense

Accumulated Depreciation

End of Period Book Value

December 31, 2025

December 31, 2026

December 31, 2027

December 31, 2028

  1. Record the entry for December 31, 2025 to record the depreciation for the year.

Date

Account Name

Debit

Credit

  1. Suppose the company sells the van on December 31, 2027 for $18,000 cash. Provide the journal entry to record the sale.

Date

Account Name

Debit

Credit

  1. Assume the company chooses to use the units-of-production method. Based on the information below, complete the depreciation schedule.

Year

Miles Driven

2025

27,000

2026

24,000

2027

32,000

2028

22,000

Period Ended

Depreciation Expense

Accumulated Depreciation

End of Period Book Value

December 31, 2025

December 31, 2026

December 31, 2027

December 31, 2028

Solutions

Expert Solution

As per guidelines, answering first four

A) Journal Entry for purchase of asset

Date 01 January 2025

Delivery Truck A\c Debit

To Cash/Bank A\C Credit

( Being delivery Truck purchased for cash)

B) Depreciation = (purchase value - salvage value)/usefull life of asset

Therefore Depreciation = (50,000 - 2,000)/4

= 12,000

So, Table will be filled as

Date Depreciation /accumulated/ residual

Dec 31 2025 12000 / 12000 / 38000

2026 12000 / 24000/ 26000

2027 12000 / 36000/ 14000

2028 12000/ 48000/ 2000(scrap value)

C) Journal entry for recording Depreciation

Dec 31 2025 Depreciation expense A/c Debit 12000

To accumulated Depreciation a/c 12000

D) entry for sale of asset

Dec 31st 2027 Cash A_/c debit 18000

Accumulated depreciation a/c debit 36000

To delivery truck a/c 50,000

To profit on sale 4,000

Calculation of accumulated Depreciation

Yearly Depreciation 12000

Usage 3 years

Therefore accumulated Depreciation 12000 × 3 = 36000


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