Part 1: Prepare a depreciation schedule showing depr. exp., accumulated deprecia

Question

Part 1:
Prepare a depreciation schedule showing depr. exp., accumulated depreciation and ending book value, year-by-year.
3 schedules for the 3 methods: straight-line, units-of-production, double declining basis. Asset is a delivery Truck.

Est. Life … 4 Orig. Cost Basis 26,300.00 Est. Residual Value 1,500.00 Est. total mileage 100,000 miles driven, Yr 1 23,400 miles driven, Yr 2 20,100 miles driven, Yr 3 33,100
miles driven, Yr 4 23,400

Part 2:
Assuming the truck is sold at the end of yr. 3, give the gen. journal entry to record the sale (straight-line method)
assume it was sold for: 8,750.00

Explanation / Answer

Part 1

straight-line

Year Book value at beginning Depreciation expense accumulated depreciation Book value at end

0 - - - 26300

1 26300 [26300-1500]/4 =6200 6200 20100

2 20100 6200 12400 13900

3 13900 6200 18600 7700

4 7700 6200 24800 1500

units-of-production

Year Book value at beginning Depreciation expense    accumulated depreciation    Book value at end

0 - - - 26300

1 26300 23400/100000*24800=5803.2 5803.2 20496.8

2 20496.8   20100/100000*24800=4984.8 10788 15512

3   15512   33100/100000*24800=8208.8 18996.8 7303.2

4 7303.2   23400/100000*24800=5803.2 24800 1500

double declining basis

Year Book value at beginning Depreciation expense    accumulated depreciation    Book value at end

0 - - - 26300

1 26300 26300 * 50%= 13150 13150 13150

2 13150 13150 * 50% = 6575 19725 6575

3 6575 6575 *50% = 3287.5 23012.5 3287.5

4 3287.5 1787.5 24800 1500

Part 2

Date Accounts title Dr Cr 1 Cash 8750 To profit on sale of truck] 1050 To Truck   7700 [Being truck sold at profit ] Note:- profit = sale value - book value = $8750 - $7700 = $1050

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