In the recent years, PT Angus has purchased three delivery trucks Because of frequent employee turnover...

Question

Question

In the recent years, PT Angus has purchased three delivery trucks Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method of each delivery truck, and various methods have been used. Information concerning the delivery trucks is summarized in the table below Delivery AcquiredCost Salvage Useful Life Depreciation Method Truck Value (in years) A July 1, 2012 $125,000S 10,000 B January 1, 2013 S 95,000S 7,500 10 Straight-line Double declining balance C January 1, 2013 S 96,000 S 6,000 Units -of-activity For the delivery truck number C, the truck is expected to be driven 150,000 miles. Actual miles of use in the first 3 years were: 2013: 2,800, 2014: 3,200; 2015: 3,300 Required: 1. Prepare journal entries for purchasing those delivery trucks in cash 2. Compute the amount of depreciation expense of each delivery truck per December 31, 2013. 3. Prepare journal entries for (2) 4. Prepare the depreciation table for delivery truck B Year Book Value Depreciation Annual Accumulated Book Value Beginning Rate Depreciation Depreciation Ending Expense

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Req 1.
Journal entries for Purchase of Delivery Trucks:
Date	Accounts title and explanations				Debit $	Credit $
01.07.12	Delivery Vehicle equipment (A)Dr.				125000
	Cash account					125000

01.01.13	Delivery Vehicle equipment (B)Dr.				95000
	Cash account					95000

01.01.13	Delivery Vehicle equipment (C)Dr.				96000
	Cash account					96000


Req 2.
Depreciation expenses for The year-2013:
On Truck-A (SLM basis)
Cost of vehicle		125000
Less: Salvage		10000
Depreciable cost		115000
Divide: Life:		10
Annual depreciation		11500

On Truck-B (DDB basis)
Rate of SLM (100/5): 20%
Rate of Dep as per DDB (20*2): 40%
Therefore,
Depreciation expense for 2013: 95000*40% = 38000

On Truck-C (Units of Activity)
Cost of vehicle		96000
Less: Salvage		6000
Depreciable cost		90000
Divide: Life:		150000	Miles
Depreciation per Mile		0.6	per mile
Miles runs in 2013		2800
Depreciation expense for 2013 (2800 miles @ 0.60) = 1680

Req 3.
Journal entries for Depreciation expense of 2013:
Date	Accounts title and explanations				Debit $	Credit $
31.12.13	Depreciation expenses Dr.				11500
	Accumulated Depreciation-Delivery Equipment-A					11500

31.12.13	Depreciation expenses Dr.				38000
	Accumulated Depreciation-Delivery Equipment-B					38000

31.12.13	Depreciation expenses Dr.				1680
	Accumulated Depreciation-Delivery Equipment-C					1680


Req 4.
Depreciation Table for Truck-B
Year	BV Beg.	Dep rate	Annual Dep	Accumulated	BV end
			Expenses	Depreciation
2013	95000	40%	38000	38000	57000
2014	57000	40%	22800	60800	34200
2015	34200	40%	13680	74480	20520
2016	20520	40%	8208	82688	12312
2017	12312	40%	4812	87500	7500

Note: Dep for 2017 as per DDB = 12312*40% = 4925
But it will make the Book value at the end below $ 7500 (which is salvage value of Truck-B)
Therefore, Dep for 2017 is restricted to $ 4812 (i.e. 12312-7500) to left with salvage value at the end of life of truck.

Add a comment

Answer 2

Similar Homework Help Questions

In the recent years, PT Angus has purchased three delivery trucks Because of frequent employee turnover...

In the recent years, PT Angus has purchased three delivery trucks Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method of each delivery truck, and various methods have been used. Information concerning the delivery trucks is summarized in the table below Delivery Acquired Cost Salvage Useful Life Depreciation Method Truck Value (in years) A ly 1, 2012 $125,000S 10,000 B January 1,2013 S 95,000S 7,500 10 Straight-line Double declining-...
In the recent years, PT Agrees has purchased three delivery trucks. Because of frequent employee turnover...

In the recent years, PT Agrees has purchased three delivery trucks. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method of each delivery truck, and various methods have been used. Information concerning the delivery trucks is summarized in the table below. Acquired Cost Delivery Truck Α B Salvage Value $ 10,000 $ 7,500 Useful Life (in years) 10 July 1, 2012 January 1, 2013 $115,000 $ 95,000 Depreciation Method...
P9-7B In recent years Howard Company has purchased three machines. Because of frequent employee turnover in...

P9-7B In recent years Howard Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the tab below. Useful Life Salvage Value $5,000 Depreciation Method Straight-ine (in years) Acquired July 1, 2012 Cost $68,000 Machine 1 4 Declining-balance 64,000 6,000 2 Apr. 1, 2013 4,000 8 Units-of-activity Sept 1,...

Problem 9-2A In recent years, Avery Transportation purchased three used buses. Because of frequent turnover in...

Problem 9-2A In recent years, Avery Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods were selected. Information concerning the buses is summarized as follows. Bus Acquired Cost Salvage Value Useful Life in Years Depreciation Method 1 1/1/13 $97,900 $6,800 4 Straight-line 2 1/1/13 112,000 11,100 5 Declining-balance 3 1/1/14 83,360 8,900 4 Units-of-activity For the declining-balance method, the company uses the double-declining...
Problem 2 In recent years, Dolittle Company has purchased three machines. Because of frequent employee turnover...

Problem 2 In recent years, Dolittle Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Useful Life (in vears) Machine Acquired Jan. 1, 2016 July 1, 2017 Nov. 1, 2017 Cost $96,000 85,000 66.000 Salvage Value $12,000 10,000 6,000 Depreciation Method Straight-line Declining-balance Units-of-activity For...
In recent years, Sandhill Corporation has purchased three machines. Because of frequent employee turnover in the...

In recent years, Sandhill Corporation has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Machine Acquired Cost Residual Value Useful Life (in years) Depreciation Method 1 Jan. 1, 2018 $104,000 $12,600 5 Straight-line 2 July 1, 2019 91,250 9,150 5 Diminishing-balance 3 Nov. 1, 2019 56,434...

In recent years, Sheridan Company has purchased three machines. Because of frequent employee turnover in the...

In recent years, Sheridan Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Useful Life (in years) Depreciation Method Machine Salvage Acquired Cost Value Jan. 1, 2015 $133,000 $45,000 July 1, 2016 86,500 10,500 Nov. 1, 2016 68,2008,200 8 Straight-line Declining-balance Units-of-activity For the declining-balance...
In recent years, Pharoah Company has purchased three machines. Because of frequent employee turnover in the...

In recent years, Pharoah Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Machine Acquired Salvage Value Cost Useful Life (in years) Depreciation Method Straight-line Jan. 1, 2015 $135,500 July 1, 2016 81,500 Nov. 1, 2016 77,600 $35,500 10,200 7,600 5 Declining-balance Units-of-activity For the...
In recent years, Ivanhoe Company has purchased three machines. Because of frequent employee turnover in the...

In recent years, Ivanhoe Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Machine Acquired Cost Salvage Value Useful Life (in years) Depreciation Method Jan 1, 2020 $135,500 $25,500 10 Straight-line Declining-balance July 1, 2021 Nov. 1, 2021 80,000 77,600 11,400 8,600 7 Units-of-activity For...

In recent years, Oriole Company has purchased three machines. Because of frequent employee turnover in the...

In recent years, Oriole Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Salvage Useful Life Depreciation Method Machine Acquired Cost Value (in years) 1 Jan. 1, 2020 $132,500 $52,500 8 Straight-line 2 July 1,2021 91,000 11,800 5 Declining-balance 3 Nov. 1,2021 71.900 7,900 Units-of-activity...

In the recent years, PT Angus has purchased three delivery trucks Because of frequent employee turnover...

Homework Answers