4 5 3 Bill's Photos buys a truck on 4/1/2000 for the business. The cost is 150,000 and they expect to use it for 6 years and expect a salvage value at that time of $6,000. Use straight line depreciation. 6 PAY ATTENTION TO THE DATES 7 8 8. Describe the purchase of the truck with a journal entry: 9 DATE Account Debit Credit 10 11 12 13 14 9. Describe the first MONTHS depreciation with a journal entry: 15 DATE Account Debit Credit 16 17 18 19 20 11. They decide to sell the truck on 10/31/2005. What is the net book value at this time? 21 22 23 24 26 25 12. The truck is sold for 12,000 cash on 10/31/2005. Describe this with a journal entry. 27 Go back to the original assumptions. Assume they used miles driven as the method 28 of depreciation. They believe it will be used 100,000 miles with the same 8,000 salvage value. 30 13. Describe the first months depreciation if they drive the truck 3,000 miles. DATE Account Debit Credit 29 31 32 33 34 35 36 14. If they drive it for 90,000 miles and sell it for 5,000, create the journal entry. DATE Account Debit Credit 37 38 39 10/31/05