Answer:
<u>Year 1
</u>
Jan. 8. Purchased a used delivery truck for $24,000, paying cash.
- Dr Truck 24,000
- Cr Cash 24,000
Mar. 7. Paid garage $900 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck.
- Dr Maintenance expenses - Truck 900
- Cr Cash 900
Dec. 31. Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is four years, with a residual value of $4,000 for the truck.
Depreciation expense = 2 x 0.25 x $24,000 = $12,000
- Dr Depreciation expense 12,000
- Cr Accumulated depreciation - truck 12,000
<u>Year 2
</u>
Jan. 9. Purchased a new truck for $50,000, paying cash.
- Dr Truck new 50,000
- Cr Cash 50,000
Feb. 28. Paid garage $250 to tune the engine and make other minor repairs on the used truck.
- Dr Maintenance expenses - Truck 250
- Cr Cash 250
Apr. 30. Sold the used truck for $9,500. (Record depreciation to date in Year 2 for the truck.)
depreciation expense = 2 x 0.25 x 4/12 x $12,000 = $2,000
- Dr Depreciation expense 2,000
- Cr Accumulated depreciation - truck 2,000
truck sold at $9,500 - $10,000 (carrying value) = -$500 loss on sale
- Dr Cash 9,500
- Dr Accumulated depreciation 14,000
- Dr Loss on sale - truck 500
- Cr Truck 24,000
Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $12,000 and an estimated life of eight years.
Depreciation expense = 2 x 0.125 x $50,000 = $12,500
- Dr Depreciation expense 12,500
- Cr Accumulated depreciation - truck new 12,500
<u>Year 3
</u>
Sept. 1. Purchased a new truck for $58,500, paying cash.
- Dr Truck three 58,500
- Cr Cash 58,500
Sept. 4. Sold the truck purchased January 9, Year 2, for $36,000. (Record depreciation to date for Year 3 for the truck.)
Depreciation expense = 2 x 0.125 x 8/12 x $37,500 = $6,250
- Dr Depreciation expense 6,250
- Cr Accumulated depreciation - truck new 6,250
truck sold at $36,000 - $31,250 (carrying value) = $4,750 gain on sale
- Dr Cash 36,000
- Dr Accumulated depreciation 18,750
- Cr Truck new 50,000
- Cr Gain on sale - truck new 4,750
Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $16,000 and an estimated useful life of 10 years.
Depreciation expense = 2 x 0.1 x 4/12 x $58,500 = $3,900
- Dr Depreciation expense 3,900
- Cr Accumulated depreciation - truck three 3,900
