Question

Straight-Line Depreciation Irons Delivery Inc. purchased a new delivery truck for $42,000 on January 1, 2019. The truck is expected to have a $2,020 residual value at the end of its 5-year useful life. Irons uses the straight-line method of depreciation. Required: Prepare the journal entry to record depreciation expense for 2019 and 2020. 2019 Dec. 31 Depreciation Expense Accumulated Depreciation (Record straight-line depreciation expense) 2020 Dec. 31 Depreciation Expense Accumulated Depreciation (Record straight-line depreciation expense)

Answer 1

• All working forms part of the answer
• Working

A	Cost	$            42,000.00
B	Residual Value	$              2,020.00
C=A - B	Depreciable base	$            39,980.00
D	Life [in years]	5
E=C/D	Annual SLM depreciation	$              7,996.00

• Under Straight Line Depreciation method, depreciation expense remains constant.
• Journal Entries

Date	Accounts title	Debit	Credit
31-Dec-19	Depreciation expense	$        7,996.00
	Accumulated Depreciation		$    7,996.00
	(depreciation expense recorded)
31-Dec-20	Depreciation expense	$        7,996.00
	Accumulated Depreciation		$    7,996.00
	(depreciation expense recorded)