Question

Janus Coat Company purchased a delivery truck on June 1 for $30,000, paying $10,000 cash and signing a 6%, month note for the remaining balance. The truck expected to depreciate $6,000 each year Janus Coat Company prepares monthly financial statements.
Account Tittles and Explanation

Answer 1

Answer:

Find below complete question:

Janus Coat Company purchased a delivery truck on June 1 for $30,000, paying $10,000 cash and signing a 6%, 2-month note for the remaining balance. The truck is expected to depreciate $6,000 each year. Janus Coat Company prepares monthly  financial statements. Instructions:

(a)  Prepare the general journal entry to record the acquisition of the delivery truck on June 1st. (b)  Prepare any adjusting journal entries that should be made on June 30th. (c)  Show how the delivery truck will be reflected on Janus Coat Company's balance sheet on June 30th.

Dr  Truck          $30,000

Cr Cash                                  $10,000

Cr notes payable                   $20,000

Dr depreciation expense         $500

Cr accumulated depreciation                  $500

Dr interest expense               $100

Cr interest payable                             $100

Balance sheet extract on 30th June"

Delivery truck                               $30,000  

Accumulated depreciation              ($500)

Net book value                            $29,500

Explanation:

The journal entry to record the purchase of the truck would have $30,000 debited to truck account while cash and notes payable are credited with $10,000 and $20,000 respectively.

On 30 June depreciation expense =$6000/12=$500

Interest of one month on the note payable on 30th June=$20,000*6%*1/12=$100