On 2007 January 2, Blake Company purchased a delivery truck for USD 78,750 cash. The truck has an… 1 answer below »

On 2007 January 2, Blake Company purchased a delivery truck for USD 78,750 cash. The truck has an estimated useful life of six years and an estimated salvage value of USD 6,750. The straight-line method of depreciation is being used.

a. Prepare a schedule showing the computation of the book value of the truck on 2009 December 31.

b. Assume the truck is to be disposed of on 2010 July 1. Prepare the journal entry to record depreciation for the six months ended 2010 June 30.

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c. Prepare the journal entries to record the disposal of the truck on 2010 July 1,under each of the following unrelated assumptions:

i. The truck was sold for USD 26,250 cash.

ii. The truck was sold for USD 48,000 cash.

iii .The truck was retired from service, and it is expected that USD 20,625 will be received from the sale of salvaged materials.

iv. The truck and USD 60,000 cash were exchanged for office equipment that had a cash price of USD 105,000. The exchange has commercial substance.

v. The truck and USD 67,500 cash were exchanged for a new deliver  truck that had a cash price of USD 112,500. The exchange has no commercial substance.

vi. The truck was completely destroyed in an accident. Cash of USD 25,500 is expected to be recovered from the insurance company.

 

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