Borrell Company purchased 4 delivery trucks on January 2, 2013, for $22,000 each
ID: 2505067 • Letter: B
Question
Borrell Company purchased 4 delivery trucks on January 2, 2013, for $22,000 each. Borrell expected 2 of the trucks to last 5 years and have a residual value of $3,500 each. The other 2 trucks had an expected life of 8 years and no residual value. Borrell uses straight-line depreciation on a composite basis.
Required:
Prepare journal entries to record the following events:
1. January 1, 2015. One of the 2 trucks expected to last 5 years is destroyed in an accident. The truck was not insured and the scrap value is $400.
2. January 5, 2015. A new truck is acquired for $26,000. It has an expected life of 4 years and a residual value of $3,920. 3. Depreciation expense for 2015.
Explanation / Answer
Annual depreciation on one truck having a 5 year life = (22000-3500)/5
= $3700 on each of the two trucks having a 5 year life.
Annual depreciation on one truck having a 8 year life = 22000/8
= $2750 on each of the two trucks having a 8 year life
1]book value of the truck destroyed on jan-1,2015 = 22000
Annual depreciation on one truck having a 5 year life = (22000-3500)/5
= $3700 on each of the two trucks having a 5 year life.
Annual depreciation on one truck having a 8 year life = 22000/8
= $2750 on each of the two trucks having a 8 year life
1]book value of the truck destroyed on jan-1,2015 = 22000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.