Prepare the problems below using Excel. Upload the workbook using the link.
1. On January 2, 2014, Goldsmith Corporation purchased a delivery truck for $62,750. The estimated useful life of the truck is 4 years, with an estimated salvage value of $9,000. The truck is expected to be driven 215,000 miles during its useful life.
a) If Goldsmith uses double-declining-balance (DDB) depreciation, what is the amount of depreciation for 2015? What is the balance of the accumulated depreciation account at the end of 2015 after adjusting entries have been made?
b) Refer to part a. Assume Goldsmith used DDB depreciation and sold the truck at the beginning of 2016 for $20,100. What is the amount of the gain or loss on the sale of the delivery truck?
c) Assume that Goldsmith used the units-of-production depreciation instead of the DDB method in part (a). The delivery truck was driven 32,500 miles the first year and 20,200 miles the second year. What is the amount of depreciation expense for 2014 and for 2015? What is the book value of the truck at the end of 2015?