Question

Depreciation by units-of-activity Method Prior to adjustment at the end of the year, the balance in Trucks is $416,400 and the balance in Accumulated Depreciation—Trucks is $123,980. 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 $83,000 $12,450 200,000 miles — 30,000 miles 2 115,400 13,848 410,000 $23,080 41,000 3 95,500 13,370 206,000 $76,400 20,600 4 122,500 14,700 410,000 $24,500 49,200 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 $ 0.35 30,000 $ 10,500 2 $ 0.24 41,000 $ 9,840 3 $ 20,600 $ 4 $ 49,200 $ Total $ Feedback b. Journalize the entry to record depreciation for the year. Depreciation Expense-Trucks Accumulated Depreciation-Trucks

Answer 1

Required A )
Depreciation rate per Mile = (Cost - Estimated Residual Value )/ Estimated Useful life
Truck 1 :
Depreciation rate per Mile = (Cost - Estimated Residual Value )/ Estimated Useful life
Depreciation rate per Mile = ($ 83,000 - $ 12,450 )/ 200,000 Miles
Depreciation rate per Mile = 0.35 per Mile (rounded to 2 decimal )
Truck 2 :
Depreciation rate per Mile = (Cost - Estimated Residual Value )/ Estimated Useful life
Depreciation rate per Mile = ($ 115,400 - $ 13,848 )/ 410,000 Miles
Depreciation rate per Mile = 0.25 per Mile (Rouned to 2 decimal )
Truck 3 :
Depreciation rate per Mile = (Cost - Estimated Residual Value )/ Estimated Useful life
Depreciation rate per Mile = ($ 95,500 - $ 13,370 )/ 206,000 Miles
Depreciation rate per Mile = 0.40 per Mile (Rounded to 2 decimal )
Truck 3 :
Depreciation rate per Mile = (Cost - Estimated Residual Value )/ Estimated Useful life
Depreciation rate per Mile = ($ 122,500 - $ 14,700 )/ 410,000 Miles
Depreciation rate per Mile = 0.26 per Mile (Rounded to 2 decimal )

Truck No	Rate Per Mile	Miles Operated	Credited to Accumulated Depreciation
1	$ 0.35 Per Mile	30,000 Miles	$ 10,500       { $ 0.35*30,000 Miles}
2	$ 0.25 Per Mile	41,000 Miles	$ 10,250       { $ 0.25*41,000 Miles}
3	$ 0.40 Per Mile	20,600 Miles	$ 8,240         { $ 0.40*20,600 Miles}
4	$ 0.26 Per Mile	49,200 Miles	$ 12,792       { $ 0.26*49,200 Miles}
			$ 41,782

Required B :
General journal	Debit	Credit
Depreciation Expense- Trucks	$ 41,782
Accumulated Depreciation-Trucks		$ 41,782
(To record Depreciation expenses for the year)