Question 4: (1.5 marks) Tanger Interiors purchased a delivery truck in cash on January 1, 2018with the following information:

(1)Purchase price: $38,000.

(2)Attorneys fee: $2,000

(3)Two-year insurance policy: $600

(4)Salestax: $5,000

The truck has its expected useful life of 10years with expected miles to be driven of 110,000. The truck havethe residual valueof$6,000after 10years of usage. Actual miles driven were 10,000 in 2018;13,000 in 2019 and 14,000 in 2020

Required:

1.Calculate cost of the delivery truck. (0.1marks)

2.Prepare journal entry torecord all these costson January 1, 2018(0.2marks)

3.Compute depreciation expense for 2018,2019,2020using(1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method (0.6 marks)

4.Suppose profitbefore depreciation of Tanger Interiors was $50,000 for 2018, calculate profit after depreciation for each depreciationmethod. What are your conclusionabout relationshipsbetween depreciation method and net income? (0.3 marks)

5.Recordthe journal entry when the truck is sold on 31 December 2020 at price $26,000 (for 3 deprecation methods (0.3 marks)