On January 2, 2015, Mullins Company purchased a delivery truck for $45,000 cash. The truck had...

On January 2, 2015, Mullins Company purchased a delivery truck for $45,000 cash. The truck had an estimated useful life of seven years and an estimated residual value of $3,000. Straight-line depreciation was used.

On September 1, 2019, the truck and $40,000 cash were exchanged for a new delivery truck that had a fair value of $70,000.

Assuming the transactions have commercial substance, circle the answer that is correct when recording the journal entry of the above asset exchange transaction.







Sept 1	New Delivery Truck
	Accumulated Depreciation, Old Truck
	Gain (Loss) on exchange
	Old Delivery Truck
	Cash

Question 5 options:

	The accumulated depreciation for the old truck would be debited by $28,000 and there would be a loss on exchange of $13,000.
	The accumulated depreciation for the old truck would be debited by $28,000 and the gain on exchange would be credited by $13,000.
	The new delivery truck would be debited by $70,000 and the accumulated depreciation, old truck would be debited by $20,000.
	The new delivery truck would be debited by $70,000 and there would be no gain or loss.

Expert Solution

ekkarill92 answered 2 years ago

On January 1, 2015, Jose Company purchased a building for $200,000 and a delivery truck for...

On January 1, 2015, Jose Company purchased a building for $200,000 and a delivery truck for $20,000. The following expenditures have been incurred during 2017: The building was painted at a cost of $5,000. To prevent leaking, new windows were installed in the building at a cost of $10,000. To improve production, a new conveyor system was installed at a cost of $40,000. The delivery truck was repainted with a new company logo at a cost of $1,000. To allow...

Bridgeport Company purchased a delivery truck for 27,000 on January 1,2020. The truck has an expected...

Bridgeport Company purchased a delivery truck for 27,000 on January 1,2020. The truck has an expected salvage value 1,500, and is expected to be driven 102,000 miles over its estimated useful life of 10 years. Actual miles driven were 12,800 in 2020 and 14,300 in 2021 Compute depreciation expense for 2020 and 2021 using the straight-line method, the units-of-activity method, and the double-declining-balance method

Swifty Company purchased a delivery truck for $26,000 on January 1, 2020. The truck has an...

Swifty Company purchased a delivery truck for $26,000 on January 1, 2020. The truck has an expected salvage value of $1,000, and is expected to be driven 100,000 miles over its estimated useful life of 10 years. Actual miles driven were 12,800 in 2020 and 12,000 in 2021. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.) Depreciation expense $ per mile eTextbook and Media List of Accounts Compute depreciation expense for 2020...

Linton Company purchased a delivery truck for $28,000 on January 1, 2017. The truck has an...

Linton Company purchased a delivery truck for $28,000 on January 1, 2017. The truck has an expected salvage value of $2,200, and is expected to be driven 110,000 miles over its estimated useful life of 10 years. Actual miles driven were 12,300 in 2017 and 10,000 in 2018. Collapse question part (a1) Correct answer. Your answer is correct. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.52.) Depreciation expense $Entry field with correct...

linton company purchased a delivery truck for 33.000 on january 1 2017 the truck has an...

linton company purchased a delivery truck for 33.000 on january 1 2017 the truck has an expected salvage value of 1,300 and is expected to be driving 109,000 miles over its esitmated useful of life of 9 years. acutal miles driving were 15,400 for 2017 and 12,500 in 2018 what is the depreication expense for 2017 and 2018 using the stright line method , the unit of activity method and the decling balance method

Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck has an...

Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck has an expected salvage value of $2,100, and is expected to be driven 106,000 miles over its estimated useful life of 10 years. Actual miles driven were 15,300 in 2017 and 13,400 in 2018. Correct answer. Your answer is correct. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.52.) Depreciation expense $Entry field with correct answer .25 per mile...

ABC Delivery Company purchased a new delivery truck on January 1 with an original cost of...

ABC Delivery Company purchased a new delivery truck on January 1 with an original cost of $50,000. The company estimates it will use the truck for 5 years and drive a total of 100,000 miles. It plans to sell the truck at the end of the five years for $5,000. During the first year, the truck was driven 15,000 miles. What is the depreciation for the first year using the DoubleDeclining Balance method? $10,000 $18,000 $7,500 $20,000 $6,750 $9,000

"A local delivery company has purchased a delivery truck for $22,000. The truck will be depreciated...

"A local delivery company has purchased a delivery truck for $22,000. The truck will be depreciated under MACRS as a five-year property. The trucks market value (salvage value) is expected to decrease by $2,000 per year. It is expected that the purchase of the truck will increase its revenue by $11,000 annually. The O&M costs are expected to be $4,800 per year. The firm is in the 40% tax bracket, and its MARR is 13.7%. If the company plans to...

"A local delivery company has purchased a delivery truck for $19,000. The truck will be depreciated...

"A local delivery company has purchased a delivery truck for $19,000. The truck will be depreciated under MACRS as a five-year property. The trucks market value (salvage value) is expected to decrease by $2,100 per year. It is expected that the purchase of the truck will increase its revenue by $11,000 annually. The O&M costs are expected to be $3,800 per year. The firm is in the 40% tax bracket, and its MARR is 15.3%. If the company plans to...

Exercise 9-7 Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck...

Exercise 9-7 Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck has an expected salvage value of $1,100, and is expected to be driven 109,000 miles over its estimated useful life of 5 years. Actual miles driven were 12,200 in 2017 and 10,000 in 2018. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.52.) Depreciation expense $___________ per mile Compute depreciation expense for 2017 and 2018 using (1)...

Question