Question

Prior to adjustment at the end of the year, the balance in Trucks is $298,443 and...

Prior to adjustment at the end of the year, the balance in Trucks is $298,443 and the balance in Accumulated Depreciation—Trucks is $100,380. 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 $80,090 $15,220 249,500 miles 21,300 miles
2 47,144 5,690 296,100 miles $15,040 32,700 miles
3 76,199 13,610 201,900 miles 61,120 8,300 miles
4 95,010 23,220 239,300 miles 24,220 22,800 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.

Chart of Accounts

CHART OF ACCOUNTS
General Ledger
ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable
114 Interest Receivable
115 Notes Receivable
116 Merchandise Inventory
117 Supplies
119 Prepaid Insurance
120 Land
123 Trucks
124 Accumulated Depreciation-Trucks
125 Equipment
126 Accumulated Depreciation-Equipment
130 Mineral Rights
131 Accumulated Depletion
132 Goodwill
133 Patents
LIABILITIES
210 Accounts Payable
211 Salaries Payable
213 Sales Tax Payable
214 Interest Payable
215 Notes Payable
EQUITY
310 Owner's Capital
311 Owner's Drawing
REVENUE
410 Sales
610 Interest Revenue
620 Gain on Sale of Trucks
621 Gain on Sale of Equipment
EXPENSES
510 Cost of Merchandise Sold
520 Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Trucks
523 Delivery Expense
524 Repairs and Maintenance Expense
529 Selling Expenses
531 Rent Expense
532 Depreciation Expense-Equipment
533 Depletion Expense
534 Amortization Expense-Patents
535 Insurance Expense
536 Supplies Expense
539 Miscellaneous Expense
710 Interest Expense
720 Loss on Sale of Trucks
721 Loss on Sale of Equipment

First Question

A. Determine for each truck the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the subsidiary accounts 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.

Truck No. Rate per Mile Miles Operated Credit to Accumulated Depreciation
1 $    21,300 $
2 32,700
3 8,300
4 22,800
Total $

JOURNAL

B. Journalize the entry on Dec. 31 to record depreciation for the year. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1

Adjusting Entries

2

3

Homework Answers

Answer #1
RATE PER MILES DRIVEN
Truck (Cost - Residual Value) / Useful Life in miles = Rate per Mile Miles operated Credited to accumulated depreciation
1 (80090 - 15220) / 249500 .26 per mile 21300 .26*21300= 5538
2 (47144 - 5690) / 296100 .14 per mile 32700 .14*32700= 4578
3 (76199 - 13610) 201900 .31 per mile 8300 2573
4 (95010 - 23220) 239300 .30 per mile 22800 6840
Total depreciation expense 19529

B)

Date Account title debit credit
31 December Depreciation Expense-Trucks 19529
Accumulated Depreciation-Trucks 19529
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