Three different companies each purchased trucks on January 1, 2018, for $50,000. Each truck was expected to last four years or 200,000 miles. Salvage value was estimated to be $5,000. All three trucks were driven 66,000 miles in 2018, 42,000 miles in 2019, 40,000 miles in 2020, and 60,000 miles in 2021. Each of the three companies earned $40,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company C uses units-of-production depreciation.

 

Answer each of the following questions. Ignore the effects of income taxes.

1. d-1. Calculate the retained earnings on the December 31, 2021, balance sheet?

 

1. d-2. Which company will report the highest amount of retained earnings on the December 31, 2021, balance sheet?

 

• Company A
• Company B
• Company C
• All companies have the same retained earnings