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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

Solutions

Expert Solution

Journal entry for purchase of Delivery truck

Date Account name Debit Credit

Jan 1, 2025 Delivery truck $ 50,000

Cash $ 50,000

( To purchase of Truck for cash)

Calculation of Depreciation P.a = (Cost of Truck - Salvage value ) / Life of Truck

= ($ 50,000 - $ 2,000) / 4

= $ 12,000

DEPRECIATION TABLE

-----------------------------------------------------------------------------------------------------------------------------------------

Period ended Depreciation Accumulated End of period

expense Depreciation book value

-------------------------------------------------------------------------------------------------------------------------------------------

Dec 31,2025 $ 12,000 $ 12,000 $ 38,000

Dec 31,2026 $ 12,000 $ 24,000 $ 26,000

Dec 31, 2027 $ 12,000 $ 36,000 $ 14,000

Dec 31, 2028    $ 12,000 $ 48,000 $ 2,000

Entry for Depreciation on Dec 31,2025

Date Account name Debit Credit

Dec31, 2025 Depreciation expense $ 12,000

Accumulated Depreciation $ 12,000

( To depreiation provided )

Sale of Truck on Dec 31,2027 for $ 18,000 , Journal entry

Date Account name Debit Credit

Dec 31, 2027 Cash $ 18000

Accumulated deprecition $ 36,000

Gain on sale $ 4,000

Delivery truck $ 50,000

( To Truck sold and gain recognised)

ekkarill92 answered 1 year ago
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