On January 1, Simms Delivery purchased a truck for $60,000. The truck has an estimated useful life of 5 years and a $10,000 expected trade-in value. Simms uses the straight-line method.

a. Prepare the adjusting entry for depreciation on December 31 of the year. (Show all calculations below the entry.)

b. Compute the book value at the end of the second year of the truck’s useful life. (Show all calculations in your answer.)

Directions: Complete the worksheet on the next page.

Dewey Legal Services

Work Sheet

For the Month Ended August 31, 20--

Account Title	Adjusted Trial Balance		Income Statement		Balance Sheet
	Debit	Credit	Debit	Credit	Debit	Credit
Cash	3,500
Accounts Receivable	800
Supplies	200
Prepaid Insurance	1,000
Computer Equipment	6,000
Accum. Depreciation –Computer Equipment		1,500
Office Furniture	9,000
Accum. Depreciation –Office Furniture		2,000
Accounts Payable		1,300
Wages Payable		350
H. Dewey, Capital		7,820
H. Dewey, Drawing	400
Legal Service Fees		10,100
Wages Expense	450
Advertising Expense	110
Rent Expense	575
Supplies Expense	375
Telephone Expense	125
Insurance Expense	85
Deprec. Exp. – Computer Equipment	250
Deprec. Exp. – Office Furniture	160
Miscellaneous Exp.	40
	23,070	23,070
Net Income (Loss)

Answer rating: 100% (QA)

a Cost of the truck 60000 Trade in value 10000 Estimated use... View the full answer