A diesel-powered tractor with a cost of $214,000 and estimated residual value of $30,000 is expected to have a useful operating life

A diesel-powered tractor with a cost of $214,000 and estimated residual value of $30,000 is expected to have a useful operating life of 50,000 hours. During January, the tractor was operated 175 hours. Determine the depreciation for the month.


Answer:








$214,000 – $30,000
50,000 hours
= $3.68 depreciation per hour
175 hours at $3.68 = $644 depreciation for January



Quality Move Company made the following expenditures on one of its delivery trucks:

Mar. 20. Replaced the transmission at a cost of $1,890.
June 11. Paid $1,350 for installation of a hydraulic lift.
Nov. 30. Paid $55 to change the oil and air filter.

Prepare journal entries for each expenditure.


Answer:











Mar. 20 Accumulated Depreciation—Delivery Truck 1,890
Cash 1,890
June 11 Delivery Truck 1,350
Cash 1,350
Nov. 30 Repairs and Maintenance Expense 55
Cash 55