Question

Intro Assignment to Use of Excel in ACC 112

Jeffries Company purchased a delivery truck for $90,000 on January 1, 2017. The truck has an expected salvage value of $4,000, and is estimated to be driven 160,000 miles over its estimated useful life of 8 years. Actual miles driven were 28,000 in 2017; 27,000 in 2018; 23,000 in 2019; 21,000 in 2020 18,000 in 2021; 16,000 in 2022; 13,000 in 2023 and 14,000 in 2024.

Instructions

(a) Using the attached Excel template complete the worksheet and compute depreciation expense, accumulated depreciation and carrying value for each year ending 2017 to 2024 using:

(1) the straight-line method

(2) the units-of-activity method

(3) the double-declining balance method

(b) Assume that Jeffries uses the straight-line method.

(1) Prepare the journal entry to record 2017 depreciation.

(2) Show how the truck would be reported in the December 31, 2017, balance sheet.

Answer 1

	PART A
1	Straight-Line Method
	Year	Beginning Book Value	Depreciation Life	Depreciation Expenses	Accumulated Depreciation	Carrying Value
	2017	$90,000	8	$10,750	$10,750	$79,250
	2018	$79,250	8	$10,750	$21,500	$68,500
	2019	$68,500	8	$10,750	$32,250	$57,750
	2020	$57,750	8	$10,750	$43,000	$47,000
	2021	$47,000	8	$10,750	$53,750	$36,250
	2022	$36,250	8	$10,750	$64,500	$25,500
	2023	$25,500	8	$10,750	$75,250	$14,750
	2024	$14,750	8	$10,750	$86,000	$4,000
	Depreciation per year = (Cost - Residual value)/Useful Life
	Depreciation per year = ($90,000 - $4,000)/8
	Depreciation per year = $10,750
2	Units of activity
	Year	Beginning Book Value	Actual Miles	Depreciation Exp.	Accumulated Depreciation	Carrying Value
	2017	$90,000	28000	$15,050	$15,050	$74,950
	2018	$74,950	27000	$14,513	$29,563	$60,438
	2019	$60,438	23000	$12,363	$41,925	$48,075
	2020	$48,075	21000	$11,288	$53,213	$36,788
	2021	$36,788	18000	$9,675	$62,888	$27,113
	2022	$27,113	16000	$8,600	$71,488	$18,513
	2023	$18,513	13000	$6,988	$78,475	$11,525
	2024	$11,525	14000	$7,525	$86,000	$4,000
	Depreciation per hour = (Cost - Residual value)/Estimated production hours
	Depreciation per hour = ($90,000 - $4,000)/160,000
	Depreciation per mile = $0.5375
3	Double Declining Balance
	Year	Beginning Book Value	Depreciation Percent	Depreciation Expenses	Accumulated Depreciation	Ending Book Value
	2017	$90,000	25.00%	$22,500	$22,500	$67,500
	2018	$67,500	25.00%	$16,875	$39,375	$50,625
	2019	$50,625	25.00%	$12,656	$52,031	$37,969
	2020	$37,969	25.00%	$9,492	$61,523	$28,477
	2021	$28,477	25.00%	$7,119	$68,643	$21,357
	2022	$21,357	25.00%	$5,339	$73,982	$16,018
	2023	$16,018	25.00%	$4,005	$77,986	$12,014
	2024	$12,014	25.00%	$3,003	$80,990	$9,010
	PART B
1
Date	Account	Debit	Credit
2017	Depreciation Expense	$10,750
	Accumulated Depreciation - Truck.		$10,750
	(To record dep. Exp.)
2	Balance Sheet
	For the year Ended December 31, 2017
	Assets
	Current Assets
	Non-Current Assets
	Vehicle	$90,000
	Less: Accumulated Depreciation	$10,750
		$79,250