Question - A truck was purchased on 1/01/11 for $32,000. Additionally, $1,000 was paid for painting the company name on the side of the truck and $3,000 for a special protective bedliner to enable the truck to be used to deliver fragile statues to the customers. $700 was paid for annual licensing and $1,200 for a one-year insurance policy.
a. 1. List and total the expenditures that would go into the asset account. Truck (or equipment) and be depreciated.
2. Make the journal entry for the acquisition (purchase) of the truck on 1/01/11.
3. Which expenditure would be expensed immediately (debited into expense account) upon spending the money?
4. Which expenditure would be put into a current asset account?
b. The truck is determined to have an estimated 6-year useful life and an estimated salvage value of $2,000. Write the journal entry made on 12/31/11, 12/31/12, 12/31/13, and 12/31/14. Write only one of the identical 4 journal entries for the yearly depreciation expense.
What depreciation method must you be using given that the entries are identical for each full year?
c. What is the book value of the equipment at 12/31/14?show the work (break-down?)
d. The truck is sold on 7/01/15 for 14,000. Show the journal entry for six months of depreciation for 2015.
e. Make the journal entry for the actual sale of the equipment on 7/01/14 for 14,000 cash. Accumulated depreciation will include depreciation for 2011,2012,2013,2014 and the six months of 2015.