In: Accounting
The following transactions and adjusting entries were completed by Gravure Graphics International, a paper-packaging company. The company uses straight-line depreciation for trucks and other vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for patents. Give the journal entries required on each of these dates: |
January 2, 2013 | Paid $91,000 cash to purchase storage shed components. |
January 3, 2013 |
Paid $4,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $12,000. |
April 1, 2013 |
Paid $27,000 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 $7,000. |
May 13, 2013 | Paid $150 cash for repairs to the pickup truck. |
July 1, 2013 |
Paid $19,000 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, 2013 |
Recorded depreciation and amortization on the pickup truck, storage shed, and patent. |
June 30, 2014 |
Sold the pickup truck for $23,500 cash. (Record the depreciation on the truck prior to recording its disposal.) |
December 31, 2014 |
Recorded depreciation on the storage shed. Determined that the patent was impaired and wrote off its remaining book value (i.e., wrote down the book value to zero). |