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Depreciation by units-of-activity Method Prior to adjustment at the end of the year, the balance in...

Depreciation by units-of-activity Method

Prior to adjustment at the end of the year, the balance in Trucks is $405,200 and the balance in Accumulated Depreciation—Trucks is $119,340. Details of the subsidiary ledger are as follows:

Truck
No.		 Cost Estimated
Residual
Value		 Estimated
Useful
Life		 Accumulated
Depreciation
at Beginning
of Year		 Miles
Operated
During
Year
1 $81,500 $12,225 230,000 miles —     34,500 miles
2 112,700 13,524 290,000 $22,540     29,000
3 91,000 12,740 213,000 $72,800     21,300
4 120,000 14,400 270,000 $24,000     32,400

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 the rate per mile to two decimal places. Enter all values as positive amounts.



Truck No.
Rate per Mile
(in cents)
Miles
Operated		 Credit to
Accumulated
Depreciation
1 $ 34,500 $
2 $ 29,000 $
3 $ 21,300 $
4 $ 32,400 $
Total $

b. Journalize the entry to record depreciation for the year.

Depreciation Expense-Trucks
Accumulated Depreciation-Trucks
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Answer #1

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 the rate per mile to two decimal places. Enter all values as positive amounts.



Truck No.
Rate per Mile
(in cents)
Miles
Operated		 Credit to
Accumulated
Depreciation
1 $81500-12225/230000 = 0.30 34,500 $10350
2 $112700-13524/290000 = 0.34 29,000 $9860
3 $91000-12740/213000 = 0.37 21,300 $7881
4 $120000-14400/32400 = 3.26 32,400 $105624
Total $133715

b. Journalize the entry to record depreciation for the year.

Depreciation Expense-Trucks 133715
Accumulated Depreciation-Trucks 133715
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