Question

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 $400,300 and the balance in Accumulated Depreciation—Trucks is $124,060. 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 $77,000 $11,550 220,000 miles —     33,000 miles
2 111,800 13,416 330,000 $22,360     33,000
3 99,000 13,860 212,000 $79,200     21,200
4 112,500 13,500 320,000 $22,500     38,400

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 $ 33,000 $
2 $ 33,000 $
3 $ 21,200 $
4 $ 38,400 $
Total $

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

_____ ______

Homework Answers

Answer #1
1)
Truck No. Rate per Mile
= (Cost (-) Residual Value) / Useful life
Miles Operated Credit to Accumulated Depreciation
1 $ 0.30
($ 77,000 (-) $ 11,550) / 220,000
33,000 $ 9,900
2 $ 0.30
($ 111,800 (-) $ 13,416 ) / 330,000
33,000 $ 9,900
3 $ 0.40
($ 99,000 (-) $ 13,860) / 212,000
21,200 $ 5,940
( $ 99,000 (-) $ 13,860 (-) $ 79,200)
4 $ 0.31
( $ 112,500 (-) $ 13,500 ) / 320,000
38,400 $ 11,904
Total $ 37,644
2)
Date Account Titles and Explanation Debit Credit
Dec-31 Depreciation Expense - Trucks $ 37,644
          Accumulated Depreciation -Trucks $ 37,644
( To record depreciation for the year.)
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