The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International during
Question:
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The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International during 2015 and 2016. The company uses straight-line depreciation for trucks and other vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for patents. |
January | 2 | , 2015 | Paid $99,000 cash to purchase storage shed components. |
January | 3 | , 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. |
April | 1 | , 2015 | Paid $45,000 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. |
May | 13 | , 2015 | Paid $900 cash for repairs to the pickup truck. |
July | 1 | , 2015 | Paid $16,000 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. |
December | 31 | , 2015 | Recorded depreciation and amortization on the pickup truck, storage shed, and patent. |
June | 30 | , 2016 | Sold the pickup truck for $38,000 cash. (Record the depreciation on the truck prior to recording its disposal.) |
December | 31 | , 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). |
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