On July 1, 2016, Farm Fresh Industries purchased a specialized delivery truck for $264,000. At the time, Farm Fresh estimated the truck to have a useful life of eight years and a residual value of $24,000. On March 1, 2021, the truck was sold for $115,000. Farm Fresh uses the straight-line depreciation method for all of its plant and equipment. Partial-year depreciation is calculated based on the number of months the asset is in service. Required: 1. Prepare the journal entry to update depreciation in 2021 2. Prepare the journal entry to record the sale of the truck. 3. Assuming that the truck was instead sold for $141,000, prepare the journal entry to record the sale.

1.

1 March 2021    

Depreciation expense                                          $5000 Dr

       Accumulated depreciation-Delivery truck             $5000 Cr

2.

1 March 2021

Accumulated depreciation-Delivery truck          140000 Dr

Cash                                                                          115000 Dr

Loss on Disposal                                                      9000 Dr

             Delivery Truck                                                   264000 Cr

3.

1 March 2021

Accumulated depreciation-Delivery truck          140000 Dr

Cash                                                                          141000 Dr

             Delivery Truck                                                   264000 Cr

             Gain on disposal                                                  17000 Cr

Explanation:

1.

Depreciation expense is the systematic allocation of an asset's cost over its estimated useful life.

The straight line method of depreciation charges a constant depreciation expense each period. The formula for depreciation expense per period under this method is,

Depreciation expense = (Cost - Residual value)  /  Estimated useful life of the asset

The depreciation expense per year of delivery truck under this method will be,

Depreciation expense per year =  (264000 - 24000) / 8 = $30000 per year

The depreciation expense to be charged in 2021 will be for 2 months.

Depreciation expense 2021 = 30000 * 2/12    = $5000

2.

The accumulated depreciation of truck on 1 March 2021 is,

Depreciation for 6 months of 2016 = 30000 * 6/12 = $15000

Depreciation for 4 years (2017 to 2020) = 30000 * 4 = $120000

Depreciation for 2 months of 2021 = $5000

Accumulated depreciation at 1 March 2021 = 15000 + 120000 + 5000

Accumulated depreciation at 1 March 2021 = $140000

Net Carrying value of asset = 264000 - 140000 = $124000

Loss on disposal as asset is sold for less than its carrying value is,

loss on disposal = 115000 - 124000   = - $9000 (loss on disposal)

3.

As the asset is sold for more than its carrying value, the gain on disposal is,

Gain on disposal = 141000 - 124000    = $17000 (gain on disposal)

the most important factor in the

work process or industry is to retain the interest of the employee. and to

retain them, their salary or profit must be adjusted to the best value. unless

the employee does not do his job properly, employees must receive bonuses or

benefits to ensure them to stay in the company. it will actually make them stay

longer, make them feel important and reduce costs for hiring new employees.

explanation:

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