Prior to adjustment at the end of the year, the balance in Trucks is $302,210 and...

Prior to adjustment at the end of the year, the balance in Trucks is $302,210 and the balance in Accumulated Depreciation—Trucks is $100,920. Details of the subsidiary ledger are as follows: Estimated Accumulated Depreciation at Miles Operated Truck No. Cost Residual Value Useful Life Beginning of Year During Year 1 $83,960 $15,360 245,000 miles — 20,600 miles 2 51,050 5,930 300,800 miles $14,700 33,800 miles 3 77,486 12,910 201,800 miles 62,180 8,100 miles 4 89,714 22,010 241,800 miles 24,040 22,500 miles A. Determine for each truck the depreciation rate per mile and the amount to be credited to the accumulated depreciation section of each subsidiary account for the miles operated during the current year. Keep in mind that the depreciation taken cannot reduce the book value of the truck below its residual value. Round rate per mile answers to the nearest cent. B. Journalize the entry on December 31 to record depreciation for the year. Refer to the Chart of Accounts for exact wording of account titles.

Solutions

Expert Solution

A.Table showing Depreciation rate per mile and the amount to be credited to the accumulated depreciation

Depreciation rate per mile= (Cost- residual value)*Miles operated in the year/ Useful life

Depreciation for the year= Depreciation rate per mile* Miles Operated in year

Truck No	Cost($)	Residual Value($)	Miles Operated in year	Useful life (in miles)	Depreciation rate($)	Depreciation for the year($)
1	83,960	15,360	20,600	245,000	0.28	5,768
2	51,050	5,930	33,800	300,800	0.15	5,070
3	77,486	12,910	8,100	201,800	0.32	2,396(*)
4	89,714	22,010	22,500	241,800	0.28	6,300
Total						19,534

(*) Depreciation for truck 3

Depreciation based on Depreciation rate=$2,592

which is reducing the book value of the truck below its residual value, Hence the depreciation= Cost-Residual value-accumulated depreciation = $(77,486-12,910-62,180)=$2,396.

B. Journal entry to record the depreciation entry on December 31

Date	Particulars	Debit($)	credit($)
Dec 31	Depreciation expense	19,534
	Accumulated Depreciation		19,534
	(the depreciation for 4 trucks charged to accumulated depreciation)

*Please upvote if found helpful.

ekkarill92 answered 1 year ago

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