Depreciation Methods

Madison Florists acquired a truck on January 1, 2018. The company paid $11,000 for the truck, $300 delivery charge, and $450 to paint the company name on the side of the truck and $250 for a motor vehicle license. The companys accounting manager estimates the truck to have a five-year useful life and a salvage value of $1,750.

Part 1

On January 1, 2018, how much should Madison Florist capitalize for the cost of the truck?

Part 2

Compute depreciation expense for 2018 and 2019 using each of the following methods. Also, compute book value at the end of each year.

a. Straight-line

Year	Depreciation expense for the year ended Dec. 31	Book value at Dec. 31
2018	$	$
2019	$	$

b. Declining-balance

Year	Depreciation expense for the year ended Dec. 31	Book value at Dec. 31
2018	$	$
2019	$	$

c. On April 1, 2020, Madison sold the truck for $6,000. Prepare the required entries to record the sale. Assume Madison depreciated the truck using the straight-line method. Madison did not record any depreciation expense in 2020. (Hint: you need two separate entries)