Prepare the journal entry to record the expenditure

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Question - MBA Transportation (MBA T) On July 1, 2014, MBA T bought a truck for $52,000 cash. It has estimated residual value of $4,000, and an estimated life of 4 years, or 400,000 kilometers. The truck drove 99,000 kilometers in 2014, 91,000 kilometers in 2015, 120,000 kilometers in 2016, and 95,000 kilometers in 2017. MBA T. has a December 31st year end.

1. MBA T uses straight-line method of depreciation,

2. On May 1, 2015 a new canopy was installed onto the truck at a cost of $5,000,

3. The useful life was changed from four years to six years after installation of the new canopy, and

4. The estimated residual value was changed from $4,000 to $6,000

Prepare the following journal entries:

1. Prepare the journal entry to record the expenditure on the canopy for cash on May 1st 2015.

2. Prepare the journal entry to record the depreciation expense for year 2015.

3. Close the depreciation expense account on December 31, 2015.

How would the journal entry and close the depreciation expense account look like?

Reference no: EM132234595

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