Depreciationby units-of-activity method

Prior to adjustment at the end of the year, the balance in Trucks is $392,900 and the balance in Accumulated DepreciationTrucks is $123,480. Details of the subsidiary ledger are as follows:

Truck No.	Cost	Estimated Residual Value	Estimated Useful Life	Accumulated Depreciation at Beginning of Year	Miles Operated During Year
1	$78,500	$11,775	220,000 miles		33,000 miles
2	110,900	13,308	350,000 miles	$22,180	35,000 miles
3	101,000	14,140	210,000 miles	80,800	21,000 miles
4	102,500	12,300	340,000 miles	20,500	40,800 miles

Question Content Area

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 Operated	Credit to Accumulated Depreciation
1	fill in the blank 1 of 9$	33,000	fill in the blank 2 of 9$
2	fill in the blank 3 of 9	35,000	fill in the blank 4 of 9
3	fill in the blank 5 of 9	21,000	fill in the blank 6 of 9
4	fill in the blank 7 of 9	40,800	fill in the blank 8 of 9 Incorrect
Total			fill in the blank 9 of 9$

Feedback Area

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.

Question Content Area

b. Journalize the entry to record depreciation for the year. If an amount box does not require an entry, leave it blank.

blank	Account	Debit	Credit
blank	Accounts PayableAccumulated Depreciation-TrucksCashDepreciation Expense-TrucksTruck ExpenseTrucksDepreciation Expense-Trucks	Depreciation Expense-Trucks	Depreciation Expense-Trucks
	Accounts PayableAccumulated Depreciation-TrucksCashDepreciation Expense-TrucksTruck ExpenseTrucksAccumulated Depreciation-Trucks	Accumulated Depreciation-Trucks