The following transactions and adjusting entries were comple

The following transactions and adjusting entries were completed by a local delivery company called Fast Delivery. The company uses straight-line depreciation for delivery vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for franchise rights.

Paid $182,000 cash to purchase a small warehouse building near the airport. The building has an estimated life of 20 years and a residual value of $3,300.

Paid $50,000 cash to purchase a delivery van. The van has an estimated useful life of five years and a residual value of $10,000.

Paid $300 cash to paint a small office in the warehouse building.

Paid $79,500 cash to UPS to begin operating Fast Delivery business as a franchise using the name The UPS Store. This franchise right expires in five years.

Recorded depreciation and amortization on the delivery van, warehouse building, and franchise right.

Sold the warehouse building for $146,000 cash. (Record the depreciation on the building prior to recording its disposal.)

Recorded depreciation on the delivery van and amortization on the franchise right. Determined that the franchise right was not impaired in value.

Journal entry worksheet transaction list:

1

Record the purchase of a warehouse building for $182,000 cash

2

Record the purchase of a delivery van for $50,000 cash.

3

Record the payment for painting a small office in the warehouse building for $300.

4

Record the payment for oil changes in the delivery van of $200.

5

Record the franchise rights purchased for $79,500 to allow for the operation of a fast delivery business.

6

Record the depreciation and amortization expenses on the delivery van, warehouse building, and franchise rights for the year 2015.

7

Record the depreciation of the warehouse building up to the date of sale in 2016.

8

Record the sale of the warehouse building for $146,000 cash.

9

Record the depreciation and amortization expenses on the delivery van and franchise rights for the year 2016.

The following transactions and adjusting entries were completed by a local delivery company called Fast Delivery. The company uses straight-line depreciation for delivery vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for franchise rights.

Solution

Journal Entry Date Account Tittle & Explanation Debit Credit 01-Jan Building $1,82,000 Cash $1,82,000 To record Purchase of Building 01-Jul Delivery Van $50,000 Cash $50,000 To Record Purchase of Delivery 02-Oct Painting Expense $300 Cash $300 To Record Painting Expemse 13-Oct Oil Expense $200 Cash $200 To Record Oil Expense 01-Dec Franchise Right $79,500 Cash $79,500 To record the payemnt of Franchise Right 31-Dec Deprreciation Expense (182000/20) * 2 times $18,200 Accumulated Depreciation $18,200 To Record Dep Expense on Building Deprreciation Expense ($50000-$10000)/5*6/12 $4,000 Accumulated Depreciation $4,000 To Record Dep Expense on Delivery Van for 6 Month Amortization Expense ($79500/5*1/12) $1,325 Franchisee Right $1,325 To Record Amortization Expenseon Franchise right for 1 Month 30-Jun Deprreciation Expense ($182000-18200)/20*2)*6/12 $8,190 Accumulated Depreciation $8,190 To Record Dep Expense on Building 30-Jun Cash $1,46,000 Loss on Sale of Building $1,420 Building ($182000-26390-8190) $1,47,420 To Record Sale of building 31-Dec Depreciation Expense (50000-10000)/5 $8,000 Accumulated Depreciation $8,000 To Record Depreciation expense on Delivery Van for 1 year Amortization Expense ($79500/5) $15,900 Franchisee Right $15,900 To Record Amortization Expenseon Franchise right for 1 year