Prepare all the necessary adjusting entry at fiscal year-end

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Reference no: EM132764134

Seattle-Cab Inc. owns a vehicle that was purchased on January 1,2007 for $45,000. The vehicle has been depreciated using the straight-line method over 10 years and has a residual value of $5,000. On September 30,2015, Seattle-Cab sold it for $7,000cash. The following day, October 1, Seattle-Cab bought a new vehicle for $50,000 by signing a n8%, four-year bank loan. Principal and interest are due at maturity.Additional costs incurred: an insurance premium for one year, $1,500;and preparation charges(i.e., registration, license plate)for $3,000, all paid for in cash. Seattle-Cab depreciates the new vehicle using the double-declining-balance method over five years. The new vehicle has an estimated residual value of $6,000.

Problem 1: Prepare the journal entries to record the sale of the old vehicle on Sept. 30

Problem 2: Prepare the journal entries to record the purchase of the new vehicle on Oct 1

Problem 3: Prepare all the necessary adjusting entry at fiscal year-end Dec 31, 2015

Reference no: EM132764134

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