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.