2013年10月2日星期三

Capitalization & Depreciation?

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I am completely lost. The work and the answers is what I am looking for please, if not at least just some help but the answers will get "best answer" points.


The Martin Ready-Mix Company purchases a new 10-Yard delivery truck for $138,000. The following information is also available.


Sales Taxes 9,500

Transit Insurance 500

Preparation Costs 1,000

Fleet Liability Insurance 750

Painting & Lettering 500

Weekly Driver’s Wages 100

Prep Team Wages 500


The estimated life of the truck is 5 years (from 1/1/XX), with a salvage value of $10,000. The truck was purchased for cash.


1. Calculate the cost of the truck that should be capitalized.







2. Summarize the entry to the accounting equation (by account title) and give the journal entry to record the capitalization of the truck.


Assets = Liabilities + Equity








3. Using the straight-line depreciation method, calculate the depreciation expense that would be recorded for each year of the truck’s life.






4. Assume that half way through the fourth year the truck is sold for $60,000. Make the appropriate entry to the accounting equation (by account title) and give the journal entry to record the sale of the truck.


Assets = Liabilities + Equity

Capitalization & Depreciation?

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