A depreciation schedule for semi-trucks of Kingbird Manufacturing Company was requested by your auditor soon after December 31, 2021, showing the additions, retirements depreciation, and other data affecting the income of the company in the 4-year period 2018 to 2021, inclusive. The following data were ascertained. Balance of Trucksaccount. Jan. 1. 2018 Truck No. 1 purchased Jan. 1. 2015, cost $21,780 Truck No.2 purchased July 1, 2015, cost 26,620 Truck No. purchased Jan 1, 2017, cost Truck No. 4 purchased July 1, 2017, cost 29,040 Balance, Jan. 1. 2018 $113,740 36.300 The Accumulated Depreciation-Trucks account previously adjusted to January 1, 2018, and entered in the ledger, had a balance on that date of 536.542 depreciation on the four trucks from the respective dates of purchase, based on a 5 year life, no salvage value). No charges had been made against the account before January 1, 2018 Transactions between January 1, 2018, and December 31, 2021, which were recorded in the ledger, are as follows. July 1. 2018 Truck No 3 was traded for a larger one (No. 5), the agreed purchase price of which was $48,400. Kingbird paid the automobile dealer $26,620 cash on the transaction. The entry was a debit to Trucks and a credit to Cash, $26,620. The transaction has commercial substance, Jan. 1. 2019 Truck No 1 was sold for $4 235 cast entry debited Cash and credited Trucks 54,235 July 1, 2020 A new truck (No. 6) was acquired for $50,820 cash and was charged at that amount to the Trucks account (Assume truck No 2 was not retired) July 1, 2020 Truck No. 4 was damaged in a wreck to such an extent that it was sold asjunk for $847 cash. Kingbird received $3,025 from the insurance company. The entry made by the bookkeeper was a debit to Cash, $3,872 and credits to Miscellaneous Income, $847, and Trucks, $3,025. Entries for straight-line depreciation had been made at the close of each year as follows: 2018, $25,410, 2019. $27.225: 2020, $30,311:2021. $36,784 (a) Your answer is partially correct. For each of the 4 years, compute separately the increase or decrease in net income arising from the company's errors in determining or entering depreciation or in recording transactions affecting trucks, ignoring income tax considerations. (Enter credit , understated and decrease amounts using either a negative sign preceding the number eg. 45 or parentheses es (451) Per Company Books Trucks dr.(er) Acc. Dep. Trucks dr.(cr.) Retained Earning 1/1/18 Balance 113740 Trucks dr.) Acc. Dep. Trucks dr.(r.) Retained Earning 1/118 $ 36542 $ 113740 Balance 0 7/1/18 Purchase Truck #5 Trade Truck #3 12/31/18 Depreciation 0 12/31/18 Balances 1/1/19 Sale of Truck #1 12/31/19 Depreciation 12/31/19 Balances 7/1/20 Purchase of Truck #6 7/1/20 Disposal of Truck #4 12/31/20 Depreciation 12/31/20 Balances 12/31/21 Depreciation $ 12/31/21 Balance s dr.(cr.) Retained Earnings dr.(cr.) Trucks dr. (cr.) Acc. Dep. Trucks dr. (cr.) Ret -36542 $ $ 0 $ 0 0 0 i $ Acc. Dep., Trucks dr, (cr.) Retained Earnings dr. (cr.) Income overstated (Understated) $ A $
