Journalize long-term asset transactions (Learning Objectives 2, 3, & 5) 2025 min. Russell Freightway provides freight service.
Question:
Journalize long-term asset transactions (Learning Objectives 2, 3, & 5)
20–25 min.
Russell Freightway provides freight service. The company’s balance sheet includes Land, Buildings, and Motor-Carrier Equipment. Russell uses a separate accumulated depreciation account for each depreciable asset. During 2012, Russell Freightway completed the following transactions:
Jan 1 Jul 1 Oct 31 Dec 31 Traded in motor-carrier equipment with accumulated depreciation of $85,000
(cost of $132,000) for new equipment with a cash cost of $174,000. Russell received a trade-in allowance of $64,000 on the old equipment and paid the remainder in cash.
Sold a building that cost $570,000 and had accumulated depreciation of $240,000 through December 31 of the preceding year. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of
$80,000. Russell received $100,000 cash and a $590,000 note receivable.
Purchased land and a building for a cash payment of $900,000. An independent appraisal valued the land at $331,200 and the building at $703,800.
Recorded depreciation as follows:
New motor-carrier equipment has an expected useful life of 800,000 miles and an estimated residual value of $22,000. Depreciation method is the units-of-production method. During the year, Russell drove the truck 100,000 miles.
Depreciation on buildings is straight-line. The new building has a 40-year useful life and a residual value equal to $60,000.
Requirement 1. Record the transactions in Russell Freightway’s journal. Round your depreciation expense to the nearest whole dollar.
AppendixLO1
Step by Step Answer:
Financial Accounting
ISBN: 9781292019543
3rd Global Edition Edition
Authors: Robert Kemp, Jeffrey Waybright, Pearson Education