Loban Company purchased, on January 1 for cash, four cars for $9,000 each and expects that they will be sold in 3 years for $1,500 each. The company uses group depreciation on a straight-line basis.Required:1.Prepare journal entries to record the acquisition and the first year’s depreciation expense.2.If one of the cars is sold at the beginning of the second year for $7,000, what journal entry is required?

Golden Rules of Accounting: Account Debit Credit Personal Accounts The Receiver The…

Answered: Loban Company purchased, on January 1…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 7E: Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for...

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Loban Company purchased, on January 1 for cash, four cars for $9,000 each and expects that they will be sold in 3 years for $1,500 each. The company uses group depreciation on a straight-line basis.

Required:

1.	Prepare journal entries to record the acquisition and the first year’s depreciation expense.
2.	If one of the cars is sold at the beginning of the second year for $7,000, what journal entry is required?

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