Prior to adjustment at the end of the year, the balance in Trucks is $301,504 and the balance in Accumulated DepreciationTrucks is $102,930. Details of the subsidiary ledger are as follows:

		Estimated		Accumulated Depreciation at	Miles Operated
Truck No.	Cost	Residual Value	Useful Life	Beginning of Year	During Year
1	$85,650	$15,370	251,000 miles		20,200 miles
2	53,932	5,660	301,700 miles	$13,760	32,100 miles
3	77,176	12,600	201,800 miles	62,800	7,700 miles
4	84,746	23,490	235,600 miles	26,370	22,900 miles

A.	Determine for each truck the depreciation rate per mile and the amount to be credited to the accumulated depreciation section of each subsidiary account for the miles operated during the current year. Keep in mind that the depreciation taken cannot reduce the book value of the truck below its residual value. Round rate per mile answers to the nearest cent.
B.	Journalize the entry on December 31 to record depreciation for the year. Refer to the Chart of Accounts for exact wording of account titles.

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Chart of Accounts

CHART OF ACCOUNTS
General Ledger
ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 123 Trucks 124 Accumulated Depreciation-Trucks 125 Equipment 126 Accumulated Depreciation-Equipment 130 Mineral Rights 131 Accumulated Depletion 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary	REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale of Trucks 621 Gain on Sale of Equipment EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Trucks 523 Delivery Expense 524 Repairs and Maintenance Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Equipment 533 Depletion Expense 534 Amortization Expense-Patents 535 Insurance Expense 536 Supplies Expense 539 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Trucks 721 Loss on Sale of Equipment

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First Question

A. Determine for each truck the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the subsidiary accounts for the miles operated during the current year. Keep in mind that the depreciation taken cannot reduce the book value of the truck below its residual value. Round rate per mile answers to the nearest cent.

Truck No.	Rate per Mile	Miles Operated	Credit to Accumulated Depreciation
1		20,200
2		32,100
3		7,700
4		22,900
Total

Points:

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Explanation

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Journal

B. Journalize the entry on Dec. 31 to record depreciation for the year. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
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Solution

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
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