On July 1, 2020, Soothing Enterprises purchased a truck for $60,000. The company expects to drive the truck for 400,000 kilometers during its three-year life and it will have a residual value of $12,000. Soothing has an December 31 year end.

Instructions-

A. Prepare depreciation schedule for the life of the asset under each of the following methods:

Note: Round all numbers to the nearest dollar except for the amount per unit for the units of production- this should be rounded to two decimal places.

(i ) STRAIGHT LINE DEPRECIATION (4 marks)

........... End of Year

Year

Units of Production *

Amt./Unit =

Deprec Exp.

Acc. Deprec.

Carrying Amt.

(2) . DOUBLE DIMINISHING-BALANCE DEPRECIATION

........... End of Year

c) You were talking to a friend that knows you are taking accounting. Your friend has her own delivery business and she complains that the depreciation for her old delivery van did not come close to accumulating the cash needed to replace the delivery van. What is your response?

(d) Lui Company purchased equipment in 2013 for $ 80,000 and estimated an $ 10,000 residual value at the end of the equipment's 7-year useful life. At December 31, 2016, there was $ 30,000 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2016 the equipment was sold for $ 41,000. Prepare the appropriate journal entries to record the sale of the equipment for Lui Company, 2021.