Quick Stop's New Soft-Drink Cooler: Journal Entries and Depreciation
How can Quick Stop record the cost of the new soft-drink cooler?
Opt: Journal Entry
What is the book value of the cooler at the end of 2009?
Opt: Original Cost - Accumulated Depreciation
Journal Entry:
To record the cost and depreciation of a cooler purchased by Quick Stop, journal entries are made.
Book Value Calculation:
Final answer: To record the total cost of the new soft-drink cooler as $26,960, account for the 2009 depreciation expense of $4,460 using the straight-line method, and the cooler's book value at the end of 2009 would be $22,500.
Explanation:
1. To record the cost of the cooler, Quick Stop would make the following journal entry:
Equipment $23,000
Cash $23,000
2. To record the 2009 depreciation expense on the new cooler, Quick Stop would make the following adjusting entry:
Depreciation Expense $3,933.33
Accumulated Depreciation - Cooler $3,933.33
3. The book value of the cooler at the end of 2009 can be calculated as the original cost minus the accumulated depreciation. In this case, it would be:
$23,000 - $3,933.33 = $19,066.67
Quick Stop would record the total cost of the new soft-drink cooler as $26,960, account for the 2009 depreciation expense of $4,460 using the straight-line method, and the cooler's book value at the end of 2009 would be $22,500.