Reference no: EM132234524
Question - Depreciation Methods
J Mac Florists acquired a truck on January 1, 2019. The company paid $11,000 for the truck, $300 delivery charge, and $450 to paint the company name on the side of the truck and $250 for a motor vehicle license. The company's accounting manager estimates the truck to have a five-year useful life and a salvage value of $1,750.
Part 1 - On January 1, 2019, how much should J Mac Florist capitalize for the cost of the truck?
Part 2 - Compute depreciation expense for 2019 and 2020 using each of the following methods. Also, compute book value at the end of each year.
c. On April 1, 2021, J Mac sold the truck for $6,000. Prepare the required entries to record the sale. Assume J Mac depreciated the truck using the straight line method. J Mac did not record any depreciation expense in 2021. (Hint: you need two separate entries)