In: Accounting
The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International during 2018 and 2019. The company uses straight-line depreciation for trucks and other vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for patents.
2018 | ||||
January | 2 | Paid $87,000 cash to purchase storage shed components. | ||
January | 3 | Paid $3,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $6,000. | ||
April | 1 | Paid $39,000 cash to purchase a pickup truck for use in the business. The truck has an estimated useful life of five years and a residual value of $4,000. | ||
May | 13 | Paid $400 cash for minor repairs to the pickup truck's upholstery. | ||
July | 1 | Paid $28,000 cash to purchase patent rights on a new paper bag manufacturing process. The patent is estimated to have a remaining useful life of five years. | ||
December | 31 | Recorded depreciation and amortization on the pickup truck, storage shed, and patent. | ||
2019 | ||||
June | 30 | Sold the pickup truck for $33,000 cash. (Record the depreciation on the truck prior to recording its disposal.) | ||
December | 31 | Recorded depreciation on the storage shed. Also determined that the patent was impaired and wrote off its remaining book value (i.e., wrote down the book value to zero). |
Required:
Prepare the journal entries required on each of the above dates. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
Journal Entry- Paper Packaging Company- Storage Shed | |||
Date | Account Titles | Debit | Credit |
2018 | |||
2-Jan | Building | $87,000.00 | |
Cash | $87,000.00 | ||
3-Jan | Building | $3,000.00 | |
Cash | $3,000.00 | ||
1-Apr | Equipment | $39,000.00 | |
Cash | $39,000.00 | ||
13-May | Repair & Maintaianance | $400.00 | |
Cash | $400.00 | ||
1-Jul | Patent | $28,000.00 | |
Cash | $28,000.00 | ||
31-Dec | Depreciation Expense (18000+5250) | $23,250.00 | |
Amortization Expense | $5,600.00 | ||
Accumulated Depreciation -
Building (90000 X 20%) |
$18,000.00 | ||
Accumulated Depreciation -
Equipment (39000-4000)/ 5 X 9/12 |
$5,250.00 | ||
Accumulated Amortization -
Patent (28000/5) |
$5,600.00 | ||
2019 | |||
1-Jul | Depreciation Expense (39000 - 4000)/ 5 X 1/2 | $3,500.00 | |
Accumulated Depreciation - Equipment | $3,500.00 | ||
Cash | $33,000.00 | ||
Accumulated Depreciation -
Equipment (5250+3500) |
$8,750.00 | ||
Equipment | $39,000.00 | ||
Gain On Disposal (bal) | $2,750.00 | ||
31-Dec | Depreciation Expense (90000 -18000) X 20% | $14,400.00 | |
Accumulated Depreciation - Building | $14,400.00 | ||
31-Dec | Impairment Loss (bal) | $22,400.00 | |
Accumulated Amortization - Patents | $5,600.00 | ||
Patent | $28,000.00 |