Property, Plant, and Equipment Swift Motor Lines is a trucking company that hauls crude oil in the Rocky Mountain states.

It currently has 20 trucks. The following information relates to a single truck:

a. Date truck was purchased, July 1, 2006.

b. Cost of truck:

c. Estimated useful life of truck, eight years.

d. Estimated salvage value of truck, $27,000.

e. 2008 expenditures on truck:
(1) $6,000 on new tires and regular maintenance.
(2) On January 1, spent $44,000 to completely rework the truck’s engine. As a result of the engine work, the remaining life of the truck is increased to nine years, but the expected salvage value remains the same.
Required:
Record journal entries to account for the following. (Use the sum-of-the-years’-digits depreciation method.)
1. The purchase of the truck.
2. Depreciation expense for:

a. 2006

b. 2007

c. 2008 3. The expenditures on the truck during 2008.

Transcribed Image Text:

Truck Paint job Sales tax $125,000 3,000 7,000