Problem 11-4

A depreciation schedule for semi-trucks of Bramble Manufacturing Company was requested by your auditor soon after December 31, 2018, showing the additions, retirements, depreciation, and other data affecting the income of the company in the4-year period 2015 to 2018, inclusive. The following data were ascertained.

Balance of Trucks account, Jan. 1, 2015Truck No. 1 purchased Jan. 1, 2012, cost$18,900Truck No. 2 purchased July 1, 2012, cost23,100Truck No. 3 purchased Jan. 1, 2014, cost31,500Truck No. 4 purchased July 1, 2014, cost25,200Balance, Jan. 1, 2015$98,700

The Accumulated Depreciation-Trucks account previously adjusted to January 1, 2015, and entered in the ledger, had a balance on that date of $31,710(depreciation on the four trucks from the respective dates of purchase, based on a5-year life, no salvage value). No charges had been made against the account before January 1, 2015.

Transactions between January 1, 2015, and December 31, 2018, which were recorded in the ledger, are as follows.

July 1, 2015Truck No. 3 was traded for a larger one (No. 5), the agreed purchase price of which was $42,000. Bramble. paid the automobile dealer $23,100cash on the transaction. The entry was a debit to Trucks and a credit to Cash, $23,100. The transaction has commercial substance.Jan. 1, 2016Truck No. 1 was sold for $3,675cash; entry debited Cash and credited Trucks, $3,675.July 1, 2017A new truck (No. 6) was acquired for $44,100cash and was charged at that amount to the Trucks account. (Assume truck No. 2 was not retired.)July 1, 2017Truck No. 4 was damaged in a wreck to such an extent that it was sold as junk for $735cash. Bramble received $2,625from the insurance company. The entry made by the bookkeeper was a debit to Cash, $3,360, and credits to Miscellaneous Income, $735, and Trucks, $2,625.

Entries for straight-line depreciation had been made at the close of each year as follows: 2015, $22,050; 2016, $23,625; 2017, $26,303; 2018, $31,920.

For each of the4years, compute separately the increase or decrease in net income arising from the company's errors in determining or entering depreciation or in recording transactions affecting trucks, ignoring income tax considerations. (Enter credit, understated and decrease amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Prepare one compound journal entry as of December 31, 2018, for adjustment of the Trucks account to reflect the correct balances as revealed by your schedule, assuming that the books have not been closed for 2018. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered.Do not indent manually.)