Ask Question
3 May, 01:02

ABC Moving and Storage acquired a new truck for $100,000, paying $20,000 cash and signing a promissory note for the balance. According to the bill of sale, ABC also paid cash for sales tax of 8%, plus registration, tags and delivery fees of $400. The new truck is estimated to have a 5-year economic life and a residual (salvage) value of $8,400. ABC uses straight-line depreciation. Due to delays, the truck was not placed in service until April 1, 2020. ABC has a December 31 fiscal year.

Prepare journal entries to record the purchase of the truck and related depreciation for 2020.

+2
Answers (1)
  1. 3 May, 03:13
    0
    total cost of the truck = $100,000 (purchase price) + $8,000 (sales tax) + $400 (registration and delivery fees) = $108,400

    residual value = $8,400

    depreciation per year = ($108,400 - $8,400) x 1/5 = $20,000

    the truck was placed in service in April 1, 2020, 9/12

    xx, 2020, purchase of new truck

    Dr Truck 108,400

    Cr Notes payable 80,000

    Cr Cash 28,400

    December 31, 2020, depreciation adjustment new truck

    Dr Depreciation expense 15,000 ( = $20,000 x 9/12)

    Cr Accumulated depreciation - truck 15,000
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “ABC Moving and Storage acquired a new truck for $100,000, paying $20,000 cash and signing a promissory note for the balance. According to ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers