Question

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

2016

Jan.		1		Paid $25,015 cash plus $1,635 in sales tax for a new delivery truck estimated to have a five-year life and a $2,300 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 $2,700. 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 $26,650selected answer correct Less accumulated depreciation (from 2016) 4,870selected answer correct Book value 21,780selected answer correct Less revised salvage value not attempted Remaining cost to be depreciated not attempted Years of life remaining not attempted Total depreciation for 2017 0

Depreciation expense (for 2016)	not attempted
Depreciation expense (for 2017)	not attempted
Depreciation expense (for 2018)	not attempted
Accumulated depreciation 12/31/2018	0
Book value of truck at 12/31/2018
Total cost	not attempted
Accumulated depreciation	not attempted
Book value 12/31/2018	not attempted
not attempted	not attempted

Prepare journal entries to record these transactions and events.

	A	B	C	D	E
	No	Date	General Journal	Debit	Credit
1
2

Answer 1

1-a. depreciation for year 2017

Total cost = $26,650

Less accumulated depreciation (from 2016) = 4870

[($26,650 - $2,300) / 5 years]

Book value = 21780

Less : revised salvage value = $2,700

Remaining cost to be depreciated =19080

Years of life remaining = 3

Total depreciation for 2017 [$19080 / 3] = $6360

Note:- Years of life remaining :

Total estimated useful life changed to 4 years = 4

less: One year used in 2017 = 1

   Years of life remaining = 3

1-b Depreciation expense (for 2016) = 4870

Depreciation expense (for 2017) =$6360

  Depreciation expense (for 2018) = $6360

Accumulated depreciation 12/31/2018   = $17590

Book value of truck at 12/31/2018

  Total cost   =$26,650

Less: Accumulated depreciation =$17590

Book value 12/31/2018 = $9060

less: sale of truck = $5,400

loss for sale of Truck on December, 2018 = $3660

1-c.

Date	General Journal	Dr.	Cr.
1 jan 2016	delivery truck	$26,650
	To cash		$26,650
31 Dec 2016	Depreciation expense	4870
	To Accumulated depreciation		4870
31 Dec 2017	Depreciation expense	$6360
	To Accumulated depreciation		$6360
31 Dec 2018	Depreciation expense	$6360
	To Accumulated depreciation		$6360
31 Dec 2018	Cash	$5,400
	Accumulated depreciation	$17590
	loss on sale of deliveryTrucks	$3660
	To delivery truck		26,650