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Construct the journal entry to record the sale

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Reference no: EM132696151

Davis Enterprises, Inc. has a December 31 year end. On January 11, 20X4, Davis Enterprises, Inc. purchased a truck for heavy duty hauling for $40,000. The truck is expected to be used for 5 years and be driven an estimated 100,000 miles in total. It has an estimated salvage value of $5,000. The truck was actually driven 24,000 miles in 20X4 and 25,000 miles in 20X5. If the units-of-output method of depreciation is used (based on mileage), determine the following:

Problem a) Depreciation expense for 20X4 and 20X5.

Problem b) Presentation of the truck on the statement of financial position as of December 31, 20X5.

Problem c) Assume the truck was sold on October 15, 20X5 for $27,000. During 20X4, 24,000 actual miles were driven, however only 19,800 actual miles were driven in 20X5 through the October 15, 20X5 sale date. Prepare the journal entry to record the sale.

Reference no: EM132696151

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