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Homework answers / question archive / Swann Company sold a delivery truck on April 1, 2019
Swann Company sold a delivery truck on April 1, 2019. Swann had acquired the truck on January 1, 2015, for $39,500. At acquisition, Swann had estimated that the truck would have an estimated life of 5 years and a residual value of $4,000. Swann uses the straight-line method of depreciation. At December 31, 2018, the truck had a book value of $11,100.
Required: 1. Prepare any necessary journal entries to record the sale of the truck, assuming it sold for: a. $11,025 b. $7,525 2. How should the gain or loss on disposal be reported on the income statement? 3. Assume that Swann uses IFRS and sold the truck for $11,025. In addition, Swann had previously recorded a revaluation surplus related to this machine of $5,000. What journal entries are required to record the sale?
Chart of Accounts ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Accounts 882 Gain on Disposal of Property, Receivable Plant, and Equipment 141 Inventory 152 Prepaid EXPENSES Insurance 500 Cost of Goods Sold 186 Trucks 511 Insurance Expense 198 Accumulated 512 Utilities Expense Depreciation 521 Salaries Expense 531 Depreciation Expense LIABILITIES 532 Bad Debt Expense 211 Accounts 540 Interest Expense Payable 559 Miscellaneous Expenses 231 Salaries 892 Loss on Disposal of Property, Payable Plant, and Equipment 250 Unearned Revenue
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