Petes Pizza purchased a delivery van on January 1, 2016, for $35,000. In addition, Petes paid sales

Question:

Pete’s Pizza purchased a delivery van on January 1, 2016, for $35,000. In addition, Pete’s paid sales tax and title fees of $1,500 for the van. The van is expected to have a four-year life and a salvage value of $6,500.

Required

a. Using the straight-line method, compute the depreciation expense for 2016 and 2017.

b. Prepare the general journal entry to record the 2016 depreciation.

c. Assume the van was sold on January 1, 2019, for $21,000. Prepare the journal entry for the sale of the van in 2019.

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...