On July 1, 2016 Molly's Greenhouse purchased a new delivery truck for $100,000. She paid a $20,000 cash down payment and the remainder with a note payable. Molly estimates that the delivery truck will have a five-year useful life, or 300,000 kilometers and a residual value of $100,000. Molly's Greenhouse has a December 31 year end.
Calculate the gain or loss on disposal for the following three independent situations:
Molly sold the truck for $40,050 on January 1, 2020. By using the straight line method the carrying amount is $37,000.
(Gain/Loss) on disposal $______
Molly sold the truck for $30,500 on January 1, 2020. By using the straight line method the carrying amount is $37,000.
(Gain/Loss) on disposal $______
Molly sold the truck for $26,400 on July 1, 2020. Molly uses the straight line method.
(Gain/Loss) on disposal $_______
Molly sold the truck for $26,400 on July 1, 2020.
Using the straight line method prepare the journal entries for the above situations.