Question

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

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