Question

The following transactions and adjusting entries were completed by a local delivery company called Fast Delivery. The company uses straight-line depreciation for delivery vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for franchise rights.

January	2	, 2015	Paid $182,000 cash to purchase a small warehouse building near the airport. The building has an estimated life of 20 years and a residual value of $3,300.
July	1	, 2015	Paid $50,000 cash to purchase a delivery van. The van has an estimated useful life of five years and a residual value of $10,000.
October	2	, 2015	Paid $300 cash to paint a small office in the warehouse building.
October	13	, 2015	Paid $200 cash to get the oil changed in the delivery van.
December	1	, 2015	Paid $79,500 cash to UPS to begin operating Fast Delivery business as a franchise using the name The UPS Store. This franchise right expires in five years.
December	31	, 2015	Recorded depreciation and amortization on the delivery van, warehouse building, and franchise right.
June	30	, 2016	Sold the warehouse building for $146,000 cash. (Record the depreciation on the building prior to recording its disposal.)
December	31	, 2016	Recorded depreciation on the delivery van and amortization on the franchise right. Determined that the franchise right was not impaired in value. Journal entry worksheet transaction list: 1 Record the purchase of a warehouse building for $182,000 cash 2 Record the purchase of a delivery van for $50,000 cash. 3 Record the payment for painting a small office in the warehouse building for $300. 4 Record the payment for oil changes in the delivery van of $200. 5 Record the franchise rights purchased for $79,500 to allow for the operation of a fast delivery business. 6 Record the depreciation and amortization expenses on the delivery van, warehouse building, and franchise rights for the year 2015. 7 Record the depreciation of the warehouse building up to the date of sale in 2016. 8 Record the sale of the warehouse building for $146,000 cash. 9 Record the depreciation and amortization expenses on the delivery van and franchise rights for the year 2016.

Answer 1

Journal Entry
Date	Account Tittle & Explanation	Debit	Credit
01-Jan	Building	$1,82,000
	Cash		$1,82,000
	To record Purchase of Building
01-Jul	Delivery Van	$50,000
	Cash		$50,000
	To Record Purchase of Delivery
02-Oct	Painting Expense	$300
	Cash		$300
	To Record Painting Expemse
13-Oct	Oil Expense	$200
	Cash		$200
	To Record Oil Expense
01-Dec	Franchise Right	$79,500
	Cash		$79,500
	To record the payemnt of Franchise Right
31-Dec	Deprreciation Expense (182000/20) * 2 times	$18,200
	Accumulated Depreciation		$18,200
	To Record Dep Expense on Building
	Deprreciation Expense ($50000-$10000)/5*6/12	$4,000
	Accumulated Depreciation		$4,000
	To Record Dep Expense on Delivery Van for 6 Month
	Amortization Expense ($79500/5*1/12)	$1,325
	Franchisee Right		$1,325
	To Record Amortization Expenseon Franchise right for 1 Month
30-Jun	Deprreciation Expense ($182000-18200)/20*2)*6/12	$8,190
	Accumulated Depreciation		$8,190
	To Record Dep Expense on Building
30-Jun	Cash	$1,46,000
	Loss on Sale of Building	$1,420
	Building ($182000-26390-8190)		$1,47,420
	To Record Sale of building
31-Dec	Depreciation Expense (50000-10000)/5	$8,000
	Accumulated Depreciation		$8,000
	To Record Depreciation expense on Delivery Van for 1 year
	Amortization Expense ($79500/5)	$15,900
	Franchisee Right		$15,900
	To Record Amortization Expenseon Franchise right for 1 year