On January 1, 2009, First Bank acquired 10 cars for company use. The cost of each car was $15,000 and the bank estimated that each car would have a 4-year useful life and a residual value of $2,000
Required:
a. Provide the journal entry needed on December 31, 2010, if four cars were sold for a total of $17,500 and First Bank uses double-declining-balance depreciation.
b. Provide the journal entry needed on December 31, 2010, if four cars were sold for a total of $17,500 and First Bank uses straight-line depreciation.
c. Assume instead of the above information that on December 31, 2010, one of the cars was wrecked. Provide the journal entry needed on December 31, 2010, if First Bank's insurance company paid $2,900 for the wrecked car and the company uses straight-line depreciation.
a. Cash 17,500
Accumulated Depreciation, Cars 45,000
Gain on Sale of Cars 2,500
Cars 60,000
b. Cash 17,500
Accumulated Depreciation, Cars 26,000
Loss on Sale of Cars 16,500
Cars 60,000
c. Cash 2,900
Accumulated Depreciation, Cars 6,500
Loss on Ins Reimbursement 5,600
Cars 15,000
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