The following transactions and adjusting entries were comple

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 January 3, 2015 Paid $95,000 cash to purchase storage shed components 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 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. Paid $250 cash for repairs to the pickup truck. 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 April 1, 2015 May 13, 2015 July 1, 2015 December 31, 2015 Recorded depreciation and amortization on the pickup truck, storage shed, and June 30, 2016 December 31, 2016 Recorded depreciation on the storage shed. Determined that the patent was patent. Sold the pickup truck for $33,000 cash. (Record the depreciation on the truck prior to recording its disposal.) impaired and wrote off its remaining book value (i.e., wrote down the book value to zero) Required: Prepare the journal entries required on each of the above dates. (If no entry is required for a transaction/event, select \"No Journal Entry Required\" in the first account field. Do not round intermediate calculations.)

Solution

Journal entries

Date

Account Title

Debit

Credit

January 2 2015

Storage shed

$    95,000.00

        Cash

$    95,000.00

(storage shed components purchased)

January 3 2015

Storage shed

$      5,000.00

        Cash

$      5,000.00

(expenses for storage shed erection)

April 1 2015

Truck

$    38,000.00

      cash

$    38,000.00

(cash paid for pickup truck)

may 13 2015

Repairs

$          250.00

    cash

$          250.00

(paid for repairs)

July 1 2015

Patent

$    20,000.00

         Cash

$    20,000.00

(patent rights purchased)

December 31 2015

Depreciation expense-Truck

$      4,500.00

           Accumulated Depreciation-Truck

$      4,500.00

(depreciation charges for 9 months recorded)

December 31 2015

Depreciation expense-Storage Shed

$    20,000.00

             Accumulated Depreciation-Storage Shed

$    20,000.00

(depreciation on shed)

December 31 2015

Depreciation expense-Patent

$      2,000.00

               Accumulated Depreciation-Patent

$      2,000.00

(depreciation on Patent)

June 30 2016

Depreciation expense-Truck

$      3,000.00

                Accumulated Depreciation-Truck

$      3,000.00

(depreciation charges for 6 months recorded)

June 30 2016

Accumulated depreciation-Truck

$      7,500.00

          Truck

$      7,500.00

(Depreciation on truck transferred to truck asset account)

June 30 2016

Cash

$    33,000.00

      Truck

$    30,500.00

       Profit on sale of truck

$      2,500.00

(truck sold)

December 31 2016

Depreciation expense-Storage Shed

$    16,000.00

               Accumulated Depreciation-Storage Shed

$    16,000.00

(depreciation on shed)

December 31 2016

Depreciation expense-Patent

$      4,000.00

             Accumulated Depreciation-Patent

$      4,000.00

(depreciation on Patent)

December 31 2016

Accumulated depreciation-Truck

$      6,000.00

          Patent

$      6,000.00

(Depreciation on Patent transferred to truck asset account)

December 31 2016

Impairment Loss-Patent

$    14,000.00

        Patent

14000

(impairment loss on patent recorded)

$ 268,250.00

$ 268,250.00

Depreciation for Shed

A

Cost

$           100,000.00

B

Residual Value

$             10,000.00

C=A - B

Depreciable base

$             90,000.00

D

Life [in years]

10

E=C/D

Annual SLM depreciation

$                9,000.00

F=E/C

SLM Rate

10.00%

G=F x 2

DDB Rate

20.00%

Year

Beginning Book Value

Depreciation rate

Depreciation expense

Ending Book Value

Accumulated Depreciation

1

$                           100,000.00

20.00%

$     20,000.00

$    80,000.00

$            20,000.00

2

$                             80,000.00

20.00%

$     16,000.00

$    64,000.00

$            36,000.00

Depreciation for Truck

A

Cost

$             38,000.00

B

Residual Value

$                8,000.00

C=A - B

Depreciable base

$             30,000.00

D

Life [in years]

5

E=C/D

Annual SLM depreciation

$                6,000.00

Year

Book Value

Depreciation expense

Ending Book Value

Accumulated Depreciation

1

$                             38,000.00

$                4,500.00

$     33,500.00

$      4,500.00

2

$                             33,500.00

$                3,000.00

$     30,500.00

$      7,500.00

Depreciation for Patent

A

Cost

$             20,000.00

B

Residual Value

$                             -  

C=A - B

Depreciable base

$             20,000.00

D

Life [in years]

5

E=C/D

Annual SLM depreciation

$                4,000.00

Year

Book Value

Depreciation expense

Ending Book Value

Accumulated Depreciation

1

$                             20,000.00

$                2,000.00

$     18,000.00

$      2,000.00

2

$                             18,000.00

$                4,000.00

$     14,000.00

$      6,000.00

Journal entries
Date	Account Title	Debit	Credit
January 2 2015	Storage shed	$    95,000.00
	Cash		$    95,000.00
	(storage shed components purchased)
January 3 2015	Storage shed	$      5,000.00
	Cash		$      5,000.00
	(expenses for storage shed erection)
April 1 2015	Truck	$    38,000.00
	cash		$    38,000.00
	(cash paid for pickup truck)
may 13 2015	Repairs	$          250.00
	cash		$          250.00
	(paid for repairs)
July 1 2015	Patent	$    20,000.00
	Cash		$    20,000.00
	(patent rights purchased)
December 31 2015	Depreciation expense-Truck	$      4,500.00
	Accumulated Depreciation-Truck		$      4,500.00
	(depreciation charges for 9 months recorded)
December 31 2015	Depreciation expense-Storage Shed	$    20,000.00
	Accumulated Depreciation-Storage Shed		$    20,000.00
	(depreciation on shed)
December 31 2015	Depreciation expense-Patent	$      2,000.00
	Accumulated Depreciation-Patent		$      2,000.00
	(depreciation on Patent)
June 30 2016	Depreciation expense-Truck	$      3,000.00
	Accumulated Depreciation-Truck		$      3,000.00
	(depreciation charges for 6 months recorded)
June 30 2016	Accumulated depreciation-Truck	$      7,500.00
	Truck		$      7,500.00
	(Depreciation on truck transferred to truck asset account)
June 30 2016	Cash	$    33,000.00
	Truck		$    30,500.00
	Profit on sale of truck		$      2,500.00
	(truck sold)
December 31 2016	Depreciation expense-Storage Shed	$    16,000.00
	Accumulated Depreciation-Storage Shed		$    16,000.00
	(depreciation on shed)
December 31 2016	Depreciation expense-Patent	$      4,000.00
	Accumulated Depreciation-Patent		$      4,000.00
	(depreciation on Patent)
December 31 2016	Accumulated depreciation-Truck	$      6,000.00
	Patent		$      6,000.00
	(Depreciation on Patent transferred to truck asset account)
December 31 2016	Impairment Loss-Patent	$    14,000.00
	Patent		14000
	(impairment loss on patent recorded)
		$ 268,250.00	$ 268,250.00