1. What is the journal entry to record depreciation for a tractor that originally cost $100,000, has no salvage value, and a useful life of 5 years? Does the entry to record depreciation on the tractor affect net income?

2. What is the book value of the tractor after year 1 of depreciation? How did you calculate it? What is the book value of the tractor after 5 years of depreciation? What does this mean?

3. During the closing process, certain accounts are closed, and others are never closed. These are called temporary and permanent account, respectively. Explain which of the following are temporary and which are permanent accounts.

Depreciation Expense

Accumulated Depreciation

Gain

Loss

4. What is the normal balance and on which financial statement are the following recorded:

Gain

Loss

5. What is the journal entry to sell a tractor for $75,000 with an original cost of $100,000. It's Accumulated depreciation at the time of sell is $50,000. Be sure to calculate the gain or loss. Remember gains have a credit balance and losses have a debit balance!

6. When using the double declining method of depreciation, depreciation each year would

Increase

Decrease

7. Depreciation expense is found on which financial statement?

Income Statement

Balance Sheet

8. Each period, a company records depreciation with the following entry:

Debit Depreciation expense; Credit Accumulated Depreciation

Debit Accumulated Depreciation; Credit Depreciation Expense

Debit Truck; Credit Cash

Debit Cash; Credit Truck

9. The initial journal entry to purchase a truck would be

Debit Depreciation Expense; Credit Cash

Debit Cash; Credit Truck

Debit Truck; Credit Cash

Debit Accumulated Depreciation; Credit Cash