Question

Depreciation by units-of-activity Method

Prior to adjustment at the end of the year, the balance in Trucks is $404,700 and the balance in Accumulated Depreciation—Trucks is $121,940. Details of the subsidiary ledger are as follows:

Truck
No.
CostEstimated
Residual
Value
Estimated
Useful
Life
Accumulated
Depreciation
at Beginning
of Year
Miles
Operated
During
Year
1$80,000
$12,000
210,000miles—    
31,500miles
2117,200
14,064
300,000
$23,440    
30,000
395,000
13,300
215,000
$76,000    
21,500
4112,500
13,500
350,000
$22,500    
42,000

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$
31,500
$
2$
30,000
$
3$
21,500
$
4$
42,000
$



Total
$

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


Depreciation Expense-Trucks


Accumulated Depreciation-Trucks

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