Pact Trucking Corporation uses the units-of-production depreciation method becau
ID: 2561483 • Letter: P
Question
Pact Trucking Corporation uses the units-of-production depreciation method because units-of-production best messures wea (Clck on the icon to view the facts) Read the requirements S and tear on the trucks. Consider these facts about one Mack truck in the company's leet Requirement 1. Record the jounal entry for depreciation axpense in 2018 (Record dabits fint, then credits Select the explanation on the last line of the joumal entry table.) Date Accounts and Explanation Debit Credit Mar. 15 Choose from any list or enter any number in the input fields and then click Check Answer Clear All Check Answer remainingExplanation / Answer
1 Calulation of depreciation expense for 2018: Particulars Amount ($) Cost of rig 440,000.00 Less: Estimated salvage value 110,000.00 Depreciable value of rig 330,000.00 Expected service life (Miles) 1,000,000.00 Depreciation per mile ($ 330000/ 1000000 miles) 0.33 No. of miles run in 2018 42,000.00 Depreciation expense for 2018 13,860.00 Journal entry: Depreciation A/c Dr……………$13,860 To Rig (Fixed asset) A/c $13,860 2 Determination of cost of new truck: Cost of Rig 440,000.00 Less: Depreciation for 2015 (83000 miles * 0.33) 27,390.00 Less: Depreciation for 2016 (123000 miles * 0.33) 40,590.00 Less: Depreciation for 2017 (163000 miles * 0.33) 53,790.00 Less: Depreciation for 2018 (42000 miles * 0.33) 13,860.00 Book Value of Rig as on March 15, 2018 304,370.00 Add: Additional cash paid for Freightliner 21,000.00 Cost of new truck 325,370.00 3 Journal entry for the exchange of trucks: Freightliner (Fixed Asset) A/c Dr………………$325370 To Rig (Fixed asset) A/c $304370 To Cash A/c $21000 Please hit the like button if the answer helped you else leave a comment for further clarification. Thank you! All the best!
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