Question

Prior to adjustment at the end of the year, the balance in Trucks is $301,504 and the balance in Accumulated Depreciation—Trucks is $102,930. 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	$85,650	$15,370	251,000 miles	—	20,200 miles
2	53,932	5,660	301,700 miles	$13,760	32,100 miles
3	77,176	12,600	201,800 miles	62,800	7,700 miles
4	84,746	23,490	235,600 miles	26,370	22,900 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.

none

X

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	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	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

none

X

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		20,200
2		32,100
3		7,700
4		22,900
Total

Points:

Feedback

Check My Work

Explanation

none

X

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

Solution

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
2
3

Answer 1

Solution A:

Truck No.	Cost	Residual Value	Depreciable cost	Useful life (In miles)	Rate per Mile	Miles Operated	Accumulated depreciation at beginning	Credit to Accumulated Depreciation
1	$85,650.00	$15,370.00	$70,280.00	251000	$0.28	20,200	0	$5,656.00
2	$53,932.00	$5,660.00	$48,272.00	301700	$0.16	32,100	13,760	$5,136.00
3	$77,176.00	$12,600.00	$64,576.00	201800	$0.32	7,700	62,800	$1,776.00
4	$84,746.00	$23,490.00	$61,256.00	235600	$0.26	22,900	26,370	$5,954.00
Total								$18,522.00

Solution B:

DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
31-Dec	Depreciation Expense-Trucks Dr		$18,522.00				-$18,522.00
	To Accumulated Depreciation-Trucks			$18,522.00	-$18,522.00
	(To record depreciation expense for the year)