On January 1 of the current year, the records of Khouri Corporation showed the following regarding a truck:

On December 31 of the current year, the delivery truck was a total loss as the result of an accident.

Required:
1. Based on the data given, compute the estimated useful life of the truck that was used for recording depreciation.
2. Give all journal entries with respect to the truck on December 31 of the current year, assuming there was no insurance coverage on the truck. Show computations.
3. Assuming Khouri had casualty insurance on the truck and received $13,000 from the insurance company for the accident, would there be a gain or loss recorded for the disposal of the asset? If so how much?

Transcribed Image Text:

Equipment (estimated residual value, $9,000) Accumulated depreciation (straight-line, three years) $25,000 6,000