Reference no: EM132494636

Iowa Trucking Company entered into each of the following transactions during 2019. They use straight- line depreciation on buildings and fixtures and the 150% declining balance method on equipment. Intangible assets are amortized over 15 years. Round all answers to the nearest dollar.

1. On January 1, Iowa Trucking paid $20,000 for a used semi lift. The lift has a ten-year useful life and a $5,000 estimated residual value.
2. On April 1, Iowa Trucking acquired a used semi-truck sleeper complete with furnishings in exchange for a $96,000, 6% note payable due April 1, 2023. Interest is payable quarterly beginning on July 1, 2019. The truck had a fair value of $115,000, and the furnishings a fair value of $5,000. The truck has a useful life of eight years with a residual value of $20,000. The furnishings have a useful life of six years and a $750 residual value.
3. On September 1, Iowa Trucking Company spent $30,000 for a quarter acre lot. They spent an additional $12,000 putting up a building on that lot. The building has a useful life of 20 years.
4. On January 1, Iowa Trucking paid $20,000 to recondition a semi-truck originally purchased for $95,000 on 1/1/17. The semi-truck had an estimated useful life of 10 years and had a residual value of $20,000. The reconditioning will extend the life by two years.
5. Sold a trailer on 6/30/19 for $1,000. The trailer was purchased on 1/1/13 for $40,000. It had an eight-year useful life and a $3,000 residual value.
6. On January 1, Iowa Trucking paid $4,500 for the customer list of a small competitor recently bankrupted.

Required:

Question 1: Prepare the journal entries to record each transaction.

Question 2: Prepare any adjusting journal entries necessary at 12/31/19.

Question 3: Show what would be reported on the 2019 income statement related to the above transactions.

Question 4: Prepare the operating, investing and financing sections of the statement of cash flow for 2019. Show what would have been reported for each transaction. The operating section should be prepared under both the direct and indirect methods.