Question

04/05/2017 Paid $15,000 in cash for a lightly used truck for business purposes that she expects to own for the next 5 years and hopes to sell for $3,000. She elected to use straight-line depreciation. please help me make the journal entry for 2017 and the depreciation entry for 2022

Answer 1

Journal entries:

Journal entries
Date	Account Titles and Explanation	Acct. No.	Debit	Credit
5-Apr-17	Cash		$15,000
	Truck			$15,000
	(To record purchase of truck)
31-Dec-17	Depreciation Expense - Truck		$1,800
	Accumulated Depreciation - Truck			$1,800
	(To record depreciation expense for 9 months of use - April to December, 2,400 x 9/12 = $1,800)
31-Dec-22	Depreciation Expense – Truck		$2,400
	Accumulated Depreciation – Truck			$2,400
	(To record depreciation expense for year 2022)

Cost of truck$15,000

Salvage value $3,000

Depreciable base $15,000 - $3,000 = $12,000

Useful life = 5 years

Straight line depreciation expense = 12,000/5 = $2,400 per annum

Assuming the books are closed on December 31 every year,

The depreciation expense for year 2017 is computed as follows,

Actual depreciation expense = 2,400

Period of use – from date of purchase (April 5 ) to December 31 = 9 months

Hence depreciation expense for 2017 = 2,400 x9/12 = $1,800

Since, the annual depreciation expense under the straight line method would remain constant throughout the useful life of the asset, the depreciation expense for year 2022 would be $2,400.