Depreciation by units-of-activity Method

Prior to adjustment at the end of the year, the balance in Trucks is $417,200 and the balance in Accumulated DepreciationTrucks is $124,140. Details of the subsidiary ledger are as follows:

Truck No.CostEstimated Residual ValueEstimated Useful Life Accumulated Depreciation at Beginning of YearMiles Operated During Year

1$86,000 $12,900 240,000miles 36,000miles

2117,200 14,064 400,000 $23,440 40,000

396,500 13,510 210,000 $77,200 21,000

4117,500 14,100 390,000 $23,500 46,800

a. Determine for each truck the depreciation rate per mile and the amount to be credited to the accumulated depreciation section of each subsidiary account for the miles operated during the current year. Keep in mind that the depreciation taken cannot reduce the book value of the truck below its residual value.

Round the rate per mile to two decimal places. Enter all values as positive amounts.

Truck No. Rate per Mile (in cents) Miles OperatedCredit to Accumulated Depreciation

1$ 36,000 $

2$ 40,000 $

3$ 21,000 $

4$ 46,800 $

Total $

Feedback

Asset minus residual value equals depreciable cost. Units-of-production allocates the cost of the asset equally over the units produced. The depreciation rate stays constant, no matter how many miles are driven each period. Keep in mind that the depreciation taken cannot reduce the book value of the truck below its residual value.

b. Journalize the entry to record depreciation for the year.