Prior to adjustment at the end of the year, the balance in Trucks is $296,900 and the balance in Accumulated Depreciation—Trucks is $99,740

Prior to adjustment at the end of the year, the balance in Trucks is $296,900 and the balance in Accumulated Depreciation—Trucks is $99,740. 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 $80,000 $15,000 250,000 miles — 21,000 miles
2 54,000 6,000 300,000 $14,400 33,500
3 72,900 10,900 200,000 60,140 8,000
4 90,000 22,800 240,000 25,200 22,500

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 miles operated during the current year.

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


Answer:





















a. Depreciation Rate per Mile:
Truck #1 ($80,000 – $15,000) ÷ 250,000 = $0.26
Truck #2 ($54,000 – $6,000) ÷ 300,000 = $0.16
Truck #3 ($72,900 – $10,900) ÷ 200,000 = $0.31
Truck #4 ($90,000 – $22,800) ÷ 240,000 = $0.28
Credit to
Accumulated
Truck No. Rate per Mile Miles Operated Depreciation
1 $0.26 21,000 $ 5,460
2 0.16 33,500 5,360
3 0.31
4 0.28
8,000
22,500
1,860 *
 6,300
Total……………………………………………………………… $18,980
* Mileage depreciation of $2,480 (31 cents × 8,000) is limited to $1,860, which reduces
the book value of the truck to $10,900, its residual value.

b.
 Depreciation Expense—Trucks 18,980
Accumulated Depreciation—Trucks 18,980
Truck depreciation.



Willow Creek Company purchased and installed carpet in its new general offices on April 30 for a total cost of $18,000. The carpet is estimated to have a 15-year useful life and no residual value.

a. Prepare the journal entry necessary for recording the purchase of the new carpet.
b. Record the December 31 adjusting entry for the partial-year depreciation expense for the carpet, assuming that Willow Creek Company uses the straight-line method.


Answer:








a.
 Apr. 30 Carpet 18,000
Cash 18,000
b.
 Dec. 31 Depreciation Expense 800
Accumulated Depreciation—Carpet 800
Carpet depreciation
[($18,000 ÷ 15 years) × 8/12].