On August 7, Green River Inflatables Co. paid $1,675 to install a hydraulic lift and $40 for an air filter for one of its delivery trucks

On August 7, Green River Inflatables Co. paid $1,675 to install a hydraulic lift and $40 for an air filter for one of its delivery trucks. Journalize the entries for the new lift and air filter expenditures.


Answer:








Aug. 7 Delivery Truck 1,675
Cash 1,675
7 Repairs and Maintenance Expense 40
Cash 40




On February 14, Garcia Associates Co. paid $2,300 to repair the transmission on one of its delivery vans. In addition, Garcia Associates paid $450 to install a GPS system in its van. Journalize the entries for the transmission and GPS system expenditures.


Answer:








Feb. 14 Accumulated Depreciation—Delivery Van 2,300
Cash 2,300
14 Delivery Van 450
Cash 450




Equipment acquired at the beginning of the year at a cost of $440,000 has an estimated residual value of $25,000 and an estimated useful life of 8 years. Determine (a) the depreciable cost, (b) the straight-line rate, and (c) the annual straight-line depreciation.


Answer:
a. $415,000 ($440,000 – $25,000)
b. 12.5% = (1/8)
c. $51,875 ($415,000 × 12.5%), or ($415,000 ÷ 8 years)