Answer and Explanation:
As per the data given in the question,
The journal entries are shown below:
Year 1
On Jan 4
Delivery truck A/c Dr. $28,000
To cash Cr. $28,000
(Being the delivery truck is purchased for cash)
On Nov 2
Truck repair expense A/c Dr. $675
To Cash Cr. $675
(Being the miscellaneous repairs paid)
On Dec 31
Depreciation expense - delivery truck A/c Dr. $14,000 ($28,000 ÷ 4 years × 2)
To accumulated depreciation Cr. $14,000
(Being the depreciation expense is recorded)
Year 2
On Jan 6
Delivery truck A/c Dr. $48,000
To cash Cr. $48,000
(Being the delivery truck is purchased for cash)
On April 1
Depreciation expense - delivery truck A/c Dr. $1,750
To accumulated depreciation Cr. $1,750
(Being the depreciation expense is recorded)
The computation is shown below:
= $28,000 - $14,000 ÷ 4 years × 2 × 3 months ÷ 12 months
= $1,750
Accumulated depreciation - delivery truck A/c Dr. $15,750 ($14,000 + $1,750)
Cash A/c Dr. $15,000
To Delivery truck Cr. $28,000
To Gain on sale of delivery truck Cr. $2,750
($15,750 + $15,000 - $28,000)
(Being the sale is recorded)
On June 11
Truck repair expense A/c Dr. $450
To Cash Cr. $450
(Being the miscellaneous repairs paid)
On Dec 31
Depreciation expense - delivery truck A/c Dr. $19,200
($48,000 × 2 ÷ 5 years )
To Accumulated depreciation - delivery truck Cr. $19,200
(Being the depreciation expense is recorded)
Year 3
On July 1
Delivery truck A/c Dr. $54,000
To cash Cr. $54,000
(Being the delivery truck is purchased for cash)
On Oct 2
Depreciation expense - delivery truck A/c Dr. $8,640
To accumulated depreciation Cr. $8,640
(Being the depreciation expense is recorded)
The computation is shown below:
= $48,000 - $19,200 ÷ 5 years × 2 × 9 months ÷12 months
Cash A/c Dr. $16,750
Accumulated depreciation - delivery truck A/c Dr. $27,840
($19,200 + $8,640)
Loss on sale of delivery truck A/c Dr. $3,410
To delivery truck Cr. $48,000
(Being the sale is recorded)
On Dec 31
Depreciation expense - delivery truck A/c Dr. $6,750
To Accumulated depreciation - delivery truck Cr. $6,750
(Being the depreciation expense is recorded)
= $54,000 ÷ 8 years × 2 ÷ 6 months ÷ 12 months
