Question
ABC Production purchased a vehicle on January 1, 2013. The company intends to depreciate it over 5 years using the straight line method. Salvage value
ABC Production purchased a vehicle on January 1, 2013. The company intends to depreciate it over 5 years using the straight line method. Salvage value is $10,000. List price $80,000 Sales tax $6,800 Painting and lettering $6,450 Delivery charges $3,500 Delivery insurance $3,250 Motor vehicle license $300 Three year accident insurance $11,700
a) Calculate the cost of the new vehicle.
b) Prepare the journal entry to record the machine purchase.
c) Prepare the journal entry to record depreciation in year 2015. (Can you help me also how did you work it out )
d) What is the book value of the vehicle at the end of 2015? (Show your work)
Using the information from question 3, assume the vehicle was sold at the end of 2015 for $8,000.
a) Calculate the gain or loss on the sale
b) Make the journal entry to record the sale
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