Question: The following transactions and adjusting entries were completed by a

The following transactions and adjusting entries were completed by a paper- packaging company called Gravure Graphics International during 2015 and 2016. The company uses straight- line depreciation for trucks and other vehicles, double- declining- balance depreciation for buildings, and straight- line amortization for patents.
January 2, 2015 Paid $ 95,000 cash to purchase storage shed components.
January 3, 2015 Paid $ 5,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $ 10,000.
April 1, 2015 Paid $ 38,000 cash to purchase a pickup truck for use in the business. The truck has an estimated useful life of five years and a residual value of $ 8,000.
May 13, 2015 Paid $ 250 cash for repairs to the pickup truck.
July 1, 2015 Paid $ 20,000 cash to purchase patent rights on a new paper bag manufacturing process. The patent is estimated to have a remaining useful life of five years.
December 31, 2015 Recorded depreciation and amortization on the pickup truck, storage shed, and patent.
June 30, 2016 Sold the pickup truck for $ 33,000 cash. (Record the depreciation on the truck prior to recording its disposal.)
December 31, 2016 Recorded depreciation on the storage shed. Determined that the patent was impaired and wrote off its remaining book value (i. e., wrote down the book value to zero).
Give the journal entries required on each of the above dates.

Sale on SolutionInn
  • CreatedNovember 02, 2015
  • Files Included
Post your question