Question

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) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method. (Round depreciation cost per unit to 2 decimal places, e.g. 0.50 and depreciation rate to 0 decimal places, e.g. 15%. Round final answers to 0 decimal places, e.g. 2,125.)'

Depreciation Expense: 2017 2018

(1) Straight-line method $ $

(2) Units-of-activity method $ $

(3) Double-declining-balance method $ $

Assume that Linton uses the straight-line method. Prepare the journal entry to record 2017 depreciation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 2,125.)

Account Titles and Explanation Debit Credit

Assume that Linton uses the straight-line method. Show how the truck would be reported in the December 31, 2017, balance sheet. (Round answers to 0 decimal places, e.g. 2,125.)

LINTON COMPANY Partial Balance Sheet

$ :

$

Answer 1

1	Purchase Value	29000
	Less: Residual Value	1100
	Net Depreciable Value	27900
	Expected Mile over the Life	109000
	Depreciation Per Mile	0.26	(27900/109000)
2	Straight Line Method:
	Purchase Value	29000
	Less: Residual Value	1100		Year	Depreciation:
	Net Depreciable Value	27900		2017	5580
	Useful Life	5		2018	5580
	Depreciation PA	5580
	Unit of Activity Method:
	Depreciation Per Mile	0.26		Year	Activity	Depreciation:
				2017	12200	3122.75
				2018	10000	2559.63
	Double Declining Method:
	Useful Life	5
	Rate(1/Life)	20.00%
	Double Rate	40.00%
	Purchase Value	29000
	Depreciation for 2017	11600	(29000*40%)
	Beginning Book Value	17400
	Double Rate	40%
	Depreciation for 2018	6960	(17400*40%)
3	Journal for Striaght Line:
	Depreciation Account Dr.	5580
	To Accumulated Depreciation Account		5580
	(Being Depreciation recorded)
	Balance Sheet (Partial)
	Fixed Assets:
	Truck	29000
	Less: Accumulated Depreciation	5580
		23420