On January 1, Jones Company acquired a new delivery truck for $40,000 cash. Additional cash payments during

Question:

On January 1, Jones Company acquired a new delivery truck for $40,000 cash. Additional cash payments during the year were as follows.
• Taxes and fees on delivery truck, $3,200
• Installation of GPS system and painting of logo for truck, $3,000
• Auto and liability insurance premiums paid on truck, $1,500.
Required
a. Prepare all journal entries Jones would make regarding the delivery truck.
b. Assume that the delivery truck has an estimated useful life of five years and an estimated of $2,000. Calculate depreciation expense on the delivery truck for the current year, assuming Jones uses the double-declining-balance method of depreciation.
c. Show how Jones would report the truck on its current-year balance sheet.
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...