Question 1
Prior to adjustment at the end of the year, the balance in trucks is $225,900 and the balance is accumulated depreciation- trucks is $87,010. Details of the subsidiary ledger are as follows:
|
truck No
|
cost
|
estimated residual value
|
estimated useful life
|
estimated depreciation at beginning of year
|
Miles operated during year
|
|
1
|
75,000
|
12,000
|
150,000 mile
|
19,110
|
36,000 miles
|
|
2
|
72,900
|
9,900
|
300,000
|
59,850
|
18,000
|
|
3
|
38,000
|
3,000
|
200,000
|
8,050
|
36,000
|
|
4
|
40,000
|
4,000
|
120,000
|
|
16,000
|
(A) Determine the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the subsidiary accounts for the mile operated during the current year.
(B) Journalize the entry to record depreciation for the year.
Question 2
A storage tank acquired at the beginning of the fiscal year at a cost of $86,000 has an estimated residual value of $10,000 and an estimated useful life of eight years. Determine the following: (A) the amount of annual depreciation by the straight-line method and (B) the amount of depreciation for the first and second year computed by the double-declining-balance method.
Question 3
Equipment acquired on January 3, 2005, at a cost of $147,500, has an estimated useful life of eight years and an estimated residual value of $ 17,500.
(A)What was the annual amount of depreciation for the years 2005, 2006, and 2007, using the straight-line method of depreciation?
(B) What was the book value of the equipment of January 1, 2008?
(c) Assuming that the equipment was sold on January 2, 2008, for $95,000, journalize the entry to record the sale.
(D) Assuming that the equipment had been sold on January 2, 2008, for $100,000 instead of $95,000, journalize the entry to record the sale.
Question 4
Air Pack Company purchased packaging equipment on January 3, 2006, for $90,000. The equipment was expected to have a useful life of three years, or 21,000 operating hours, and a residual value of $6,000. The equipment was used for 8,000 hours during 2006, 7,500 hours in 2007, and 5,500 hours in 2008.
Instructions
Determine the amount of depreciation expense for the years ended December 31, 2006, 2007 and 2008, by (A) the straight-line method (B) the units-of-production method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. The following columnar headings are suggested for recording the depreciation expense amounts:
Year Straight-line method Units-of-production method Double-declining-balance method