BU32125-Summer 2018: Bus2125 Summer 2018 Madalyn Priem Exam (Ch. 1 Ch. 7) instru
ID: 2394519 • Letter: B
Question
BU32125-Summer 2018: Bus2125 Summer 2018 Madalyn Priem Exam (Ch. 1 Ch. 7) instructions Question 38 (of 40) Save& Exit Sut 3.00 points On March 31, 20X1 a company purchases a delivery van for $30,000 which it expects to use for 5 years, during which time it expects to drive the van about 100,000 miles. At the end of the 5 years it is expected that the van will be sold for $2,000 During 20X1 the van was driven 12,000 miles, and in 20X2 it was driven 25,000 miles Assume the company only prepares annual financial statements and that their year-end is the calendar year-end (i.e. December 31). Calculate the amount which would appear on the December 31, 20X2 [e. year 2) balance sheet for Accumulated Depreciation for the van if the units-ofactivity method i's used to depreciate the van. O $7000 o $10.360 O $9.520 O $11,000Explanation / Answer
Solution: (38) $10,360
Accumulated depreciation = (cost- salvage value) / Total miles x total miles driven
= (30,000- 2,000) / 100,000 x 37,000
= $10,360
Solution (39): $4,200
Straight line depreciation = (cost- salvage) ÷ useful life
= {(30,000 - 2,000) / 5 } x 9/12
= $4,200.
Solution 40: c. credit to A/D for $22.00
Explanation: at the time of sale of assets, A/D should be debited.
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