The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International during 2018 and 2019. The company uses straight-line depreciation for trucks and other vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for patents. January2, 2015
Paid $86,000 cash to purchase storage shed components.
January3, 2015
Paid $2,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $5,000.
April1, 2015
Paid $40,000 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 $3,000.
May13, 2015Paid $500 cash for repairs to the pickup truck.
July1, 2015
Paid $29,000 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.
December31, 2015
Recorded depreciation and amortization on the pickup truck, storage shed, and patent.
June30, 2016
Sold the pickup truck for $34,000 cash. (Record the depreciation on the truck prior to recording its disposal.)
December31, 2016
Recorded depreciation on the storage shed. Determined that the patent was impaired and wrote off its remaining book value (i. e., wrote down the book value to zero).
Record the journal entries for the following:
1. Record the purchase of storage shed components for $86,000.
2. Record the payment of $2,000 to have the storage shed erected
3. Record the purchase of a pickup truck for $40,000.
4.. Record the repairs of $500 to the pickup truck.
5.. Record the purchase of a patent for $29,000 on a new paper bag manufacturing process
6. Record the depreciation and amortization expense on the pickup truck, storage shed and patent for the year
7. Record the depreciation for the truck up to the date of sale.
8. Record the sale of the pickup truck for $34,000 cash.
9. Record the depreciation on the storage shed for the year.
10. Record any impairment loss incurred on the patent.