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18. Stitts Computers, Inc. purchased a delivery van for $40,000. The van is expected to have...

18. Stitts Computers, Inc. purchased a delivery van for $40,000. The van is expected to have a 5 year useful and a $2,000 salvage value. Prepare the journal entries for Stitts Computers, Inc. to show the sale of the truck under the following 2 scenarios. 1. The truck is sold for $16,500 after 3 full years of service. 2. The truck is sold for $11,000 after 4 full years of service.

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Answer #1

a) Journal entry :

Date accounts & explanation debit credit
Cash 16500
Accumlated depreciation (40000-2000/5)*3 22800
Loss on sale of delivery van 700
Delivery Van 40000
(To record sale of delivery van)

b) Journal entry :

Date accounts & explanation debit credit
Cash 11000
Accumlated depreciation (40000-2000/5)*4 30400
Gain on sale of delivery van 1400
Delivery Van 40000
(To record sale of delivery van)
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