Question
Project 1.4 Topic: Long-Term Assets Part 1 On 1/1/20X1, Illini Company acquires one truck and one car for a lump sum of $60,000. The fair
Project 1.4 Topic: Long-Term Assets Part 1
On 1/1/20X1, Illini Company acquires one truck and one car for a lump sum of $60,000. The fair values of the truck and the car are $50,000 and $30,000, respectively. The expected useful life of the truck and car is 10 years, and the expected residual values for the truck and car are $2,000 and $1,000, respectively. Illini accounts for the truck and car using the straight line method.
On 1/1/20X2, Illini trades in the car plus $10,000 cash for a newer one. The fair value of the newer car is $30,000. The expected useful life of the newer car is 10 years, and its expected residual value is $1,000. Illini accounts for the new car using the straight line method.
Please refer to the instructions and the table in this question. Enter the correct journal entry for part [A].
The Balance Sheet of the Illini as of 12/31/20X0:
Illini Company, Inc. | |||
Balance Sheet | |||
as of 12/31/20X0 | |||
Assets | |||
Current Assets: | |||
Cash | $1,500,000 | ||
Accounts receivable, net | 18,000 | ||
Inventory | 50,000 | ||
Total current assets | 1,568,000 | ||
Equipment | 90,000 | ||
Goodwill | 20,000 | ||
Total assets | $1,678,000 | ||
Liabilities and shareholders' equity | |||
Shareholders' equity: | |||
Common stock, 20,000 shares outstanding, $1 par | $20,000 | ||
Additional paid-in capital | 280,000 | ||
Retained earnings | 1,378,000 | ||
Total shareholders' equity | 1,678,000 | ||
Total liabilities and shareholders' equity | $1,678,000 |
- Note that all additional paid-in capital (APIC) sub accounts (e.g., APIC-options and APIC-treasury stock), if any, are tracked in the Additional paid-in capital account on the Balance Sheet.
Project 1.4 Part 1 Journal Entries
Date | Account Name (Debit) | Account Name (Credit) | Debit | Credit |
---|---|---|---|---|
1/1/20X1 | Truck | [A] | ||
Car | [B] | |||
Cash | [C] | |||
12/31/20X1 | Depreciation expense | [D] | ||
Accumulated depreciation-Truck | [E] | |||
Accumulated depreciation-Car | [F] | |||
1/1/20X2 | Car-New | [G] | ||
Accumulated depreciation-Car | [H] | |||
Loss | [I] | |||
Cash | [J] | |||
Car | [K] | |||
12/31/20X2 | Depreciation expense | [L] | ||
Accumulated depreciation-Truck | [M] | |||
Accumulated depreciation-Car-New | [N] |
enter answers for journal items ([A] to [N]
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