Question

On May 31, 2016, Sandals report purchased a truck at a cost of $160,000. before placing the truck into service, The company spend $2,500 painting it, $500 replacing tires, and $5,000 overhauling the engine. The truck should remain in service for 5 years and have a residual value of $7,500. The truck’s annual mileage is expected to be 15,000 in each of the first two years and 10,000 miles in the next three years. In deciding which depreciation method to use, the general manager request depreciation schedule for each of the depreciation methods (straight line, unit-of production, and double – declining-balance). Required 1. Prepare a five year depreciation schedule for his vehicle using the straight line method, the units of production method and the double declining method. 2. On June 30, 2018, the general manager traded in the old truck for a new model. If he paid $150,000 cash show the journal entry to record the trade in. (use the straight line method of depreciation).

Answer 1