Accounting for Plant Assets
Stellar Delivery Service had the following transactions relatedto its delivery truck:
Year 1 Mar. 1 Purchased for $32,500 cash a new delivery truck with anestimated useful life of five years and a $6,850 salvage value.
Mar. 2 Paid $600 for painting the company name and logo on thetruck.
Dec. 31 Recorded depreciation on the truck for the year.
Year 2 July 1 Installed air conditioning in the truck at a cost of $1,808cash. Although the truckâs estimated useful life was unaffected,its estimated salvage value was increased by $400. Sept 7 Paid $450 for truck tuneâup and safety inspection. Dec. 31 Recorded depreciation on the truck for the year.
Year 3 Sept 3 Installed a set of front and rear bumper guards at a cost of$145 cash. Dec. 31 Recorded depreciation on the truck for the year.
Year 4 Dec. 31 Recorded depreciation on the truck for the year.
Stellarâs depreciation policies include (1) using straightâlinedepreciation, (2) recording depreciation to the nearest wholemonth, and (3) expensing all truck expenditures of $150 orless.
Required
Prepare journal entries to record these transactions andadjustments.
Round answers to the nearest whole number, when appropriate.
Accounting for Plant Assets
Stellar Delivery Service had the following transactions relatedto its delivery truck:
| Year 1 | |
| Mar. 1 | Purchased for $32,500 cash a new delivery truck with anestimated useful life of five years and a $6,850 salvage value. |
| Mar. 2 | Paid $600 for painting the company name and logo on thetruck. |
| Dec. 31 | Recorded depreciation on the truck for the year. |
| Year 2 | |
| July 1 | Installed air conditioning in the truck at a cost of $1,808cash. Although the truckâs estimated useful life was unaffected,its estimated salvage value was increased by $400. |
| Sept 7 | Paid $450 for truck tuneâup and safety inspection. |
| Dec. 31 | Recorded depreciation on the truck for the year. |
| Year 3 | |
| Sept 3 | Installed a set of front and rear bumper guards at a cost of$145 cash. |
| Dec. 31 | Recorded depreciation on the truck for the year. |
| Year 4 | |
| Dec. 31 | Recorded depreciation on the truck for the year. |
Stellarâs depreciation policies include (1) using straightâlinedepreciation, (2) recording depreciation to the nearest wholemonth, and (3) expensing all truck expenditures of $150 orless.
Required
Prepare journal entries to record these transactions andadjustments.
Round answers to the nearest whole number, when appropriate.
Related questions
Transactions for Fixed Assets, Including Sale
The following transactions, adjusting entries, and closingentries were completed by King Furniture Co. during a three-yearperiod. All are related to the use of delivery equipment. Thedouble-declining-balance method of depreciation is used.
| 2012 | |
| Jan. 4. | Purchased a used delivery truck for $61,440, paying cash. |
| Feb. 24. | Paid garage $240 for changing the oil, replacing the oilfilter, and tuning the engine on the delivery truck. |
| Dec. 31. | Recorded depreciation on the truck for the fiscal year. Theestimated useful life of the truck is 8 years, with a residualvalue of $12,900 for the truck. |
| 2013 | |
| Jan. 3. | Purchased a new truck for $70,560, paying cash. |
| Mar. 7. | Paid garage $390 to tune the engine and make other minorrepairs on the used truck. |
| Apr. 30. | Sold the used truck for $40,440. (Record depreciation to datein 2013 for the truck.) |
| Dec. 31. | Record depreciation for the new truck. It has an estimatedtrade-in value of $12,700 and an estimated life of 7 years. |
| 2014 | |
| July 1. | Purchased a new truck for $85,000, paying cash. |
| Oct. 7. | Sold the truck purchased January 3, 2013, for $41,700. (Recorddepreciation to date in 2014 for the truck.) |
| Dec. 31. | Recorded depreciation on the remaining truck. It has anestimated residual value of $15,300 and an estimated useful life of10 years. |
