Question

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

2016

Jan.		1		Paid $22,015 cash plus $1,635 in sales tax for a new delivery truck estimated to have a five-year life and a $2,150 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 $2,550. 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 $5,600 cash.

Required:

Prepare journal entries to record these transactions and events.

• Record the total cost of the new delivery truck.
• Record the year-end adjusting entry for the depreciation expense of the delivery truck.
• Record the year-end adjusting entry for the depreciation expense of the delivery truck.
• Record the year-end adjusting entry for the depreciation expense of the delivery truck.
• Record the sale of the delivery truck for $5,600 cash.

Calculate book value and gain (loss) for sale of Truck on December, 2018.

Depreciation expense (for 2016)
Depreciation expense (for 2017)
Depreciation expense (for 2018)
Accumulated depreciation 12/31/2018
Book value of truck at 12/31/2018
Total cost
Accumulated depreciation
Book value 12/31/2018

Calculate depreciation for year 2017.

Total cost
Less accumulated depreciation (from 2016)
Book value
Less revised salvage value
Remaining cost to be depreciated
Years of life remaining
Total depreciation for 2017

Answer 1