Required information (The following information applies to the questions display

Question

Required information (The following information applies to the questions displayed below.) Three different companies each purchased trucks on January 1, 2018, for $76,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $6,000. All three trucks were driven 81,000 miles in 2018, 55,000 miles in 2019, 46,000 miles in 2020, and 71,000 miles in 2021. Each of the three companies earned $65,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company Buses double- declining-balance depreciation, and company C uses units-of-production depreciation. Answer each of the following questions. Ignore the effects of income taxes. d-1. Calculate the retained earnings on the December 31, 2021, balance sheet? Retained Earnings Company A Company B Company C

Explanation / Answer

Company A:

Company B:

Company C:

Straight line method: Depreciation per year (cost-salvage value)/useful life (76000-6000)/4 17500 Revenue 260000 Less: Depreciation a Cost of machinery                76,000 b Salvage Value                  6,000 A=a-b Depreciable amount                70,000 B Estimated useful life                           4 C=A/B Depreciation per year                17,500 D Number of years complete                           4 E=C*D Depreciation expense                70,000    (70,000) F=a-E NBV                  6,000 Retained earnings amount    190,000

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