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Chap10 Class Example5 Solution (student) 2010

# Chap10 Class Example5 Solution (student) 2010 - 1,400 Accum...

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Victor Leung ACCT2111 (2010) Chapter 10 1 Chapter 10 Solution 1. The cost of the truck is \$11,000 computed as follows. Cash price \$8,000 Sales taxes 3,000 Cost of truck \$11,000 (a) Entry for the purchase of the truck: April 1 2007 Truck 11,000 Cash 11,000 (b) Entry for the related expenditures: April 1 2007 License Expense -Truck 1,200 Prepaid Insurance 3,600 Cash 4,800 (c) Year-end depreciation expense (9 months): Depreciation expense per year = [(\$11,000 \$1,400]/4 = \$2,400 per year Dec 31 2007 Depreciation Expense Truck 1,800 Accum. Depreciation Truck 1,800 [\$2,400 /12 x 9] (d) Year-end adjustment for related expenses: Dec 31 2007 Prepaid License Fee Truck 300 License Expense Truck 300 Dec 31 2007 Insurance Expense 2,700 Prepaid Insurance 2,700

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Victor Leung ACCT2111 (2010) Chapter 10 2 2. (a) Updating the depreciation expense for January - July 1999 July 31 Depreciation Expense - Truck
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Unformatted text preview: 1,400 Accum Depreciation - Truck 1,400 [\$2,400 /12 x 7] Recording the loss on disposal of the old asset July 31 Accum. Depreciation - Truck 5,600 Loss on Disposal (\$11,000- \$5,600) 5,400 Truck 11,000 [Accum. Depreciation = \$2,400 / 12 x (9 + 12 + 7) = \$5,600] [Book Value = \$11,000 - \$5,600 = \$5,400] (b) Updating the depreciation expense for January - July 1999 July 31 Depreciation Expense - Truck 1,400 Accum Depreciation - Truck 1,400 Recording the gain on disposal of the old asset July 31 Accum. Depreciation - Truck 5,600 Cash 6,000 Gain on Disposal (\$6,000 - \$5,400) 600 Truck 11,000 (c) Updating the depreciation expense for January - July 1999 July 31 Depreciation Expense - Truck 1,400 Accum Depreciation - Truck 1,400 Recording the loss on disposal of the old asset July 31 Accum. Depreciation – Truck 5,600 Cash 3,500 Loss on Disposal (\$5,400 - \$3,500) 1,900 Truck 11,000...
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Chap10 Class Example5 Solution (student) 2010 - 1,400 Accum...

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