Dawson Towing Company purchased a used panel truck for ($ 28,800) cash. The next day the company's
Question:
Dawson Towing Company purchased a used panel truck for \(\$ 28,800\) cash. The next day the company's name and business were painted on the truck at a total cost of \(\$ 1,488\). The truck was then given a minor overhaul at a cost of \(\$ 192\), and new "super" tires were mounted on the truck at a cost of \(\$ 1,920\), less a trade-in allowance of \(\$ 240\) for the old tires. The truck was placed in service on April 1, 1998, at which time it had an estimated useful life of five years and a salvage value of \(\$ 3,360\).
a. Prepare a schedule showing the cost to be recorded for the truck.
b. Prepare the journal entry to record depreciation at the end of the calendar-year accounting period, December 31, 1998. Use the double-declining-balance method.
c. Assume that the straight-line depreciation method has been used. At the beginning of 2001 it is estimated the truck will last another four years. The estimated salvage value changed to \(\$ 1,920\). Prepare the entry to record depreciation for 2001 .
Step by Step Answer:
Financial Accounting A Business Perspective
ISBN: 9780072289985
7th Edition
Authors: Roger H. Hermanson, James Don Edwards