Exercise 9-7 Linton Company purchased a delivery truck for $29,000 on January 1,

Question

Exercise 9-7 Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck has an expected salvage value of $1,100, and is expected to be driven 109,000 miles over its estimated useful life of 5 years. Actual miles driven were 12,200 in 2017 and 10,000 in 2018.

Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.52.)

Depreciation expense $___________ per mile

Compute depreciation expense for 2017 and 2018 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method. (Round depreciation cost per unit to 2 decimal places, e.g. 0.50 and depreciation rate to 0 decimal places, e.g. 15%. Round final answers to 0 decimal places, e.g. 2,125.)'

Depreciation Expense: 2017 2018

(1) Straight-line method $ $

(2) Units-of-activity method $ $

(3) Double-declining-balance method $ $

Assume that Linton uses the straight-line method. Prepare the journal entry to record 2017 depreciation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 2,125.)

Account Titles and Explanation Debit Credit

Assume that Linton uses the straight-line method. Show how the truck would be reported in the December 31, 2017, balance sheet. (Round answers to 0 decimal places, e.g. 2,125.)

LINTON COMPANY Partial Balance Sheet

$ :

$

Explanation / Answer

1 Purchase Value 29000 Less: Residual Value 1100 Net Depreciable Value 27900 Expected Mile over the Life 109000 Depreciation Per Mile 0.26 (27900/109000) 2 Straight Line Method: Purchase Value 29000 Less: Residual Value 1100 Year Depreciation: Net Depreciable Value 27900 2017 5580 Useful Life 5 2018 5580 Depreciation PA 5580 Unit of Activity Method: Depreciation Per Mile 0.26 Year Activity Depreciation: 2017 12200 3122.75 2018 10000 2559.63 Double Declining Method: Useful Life 5 Rate(1/Life) 20.00% Double Rate 40.00% Purchase Value 29000 Depreciation for 2017 11600 (29000*40%) Beginning Book Value 17400 Double Rate 40% Depreciation for 2018 6960 (17400*40%) 3 Journal for Striaght Line: Depreciation Account Dr. 5580 To Accumulated Depreciation Account 5580 (Being Depreciation recorded) Balance Sheet (Partial) Fixed Assets: Truck 29000 Less: Accumulated Depreciation 5580 23420

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