A depreciation schedule for semi-trucks of Skysong Manufacturing Company was requested by your auditor soon after...

Transcribed Image Text:

A depreciation schedule for semi-trucks of Skysong Manufacturing Company was requested by your auditor soon after December 31, 2026, showing the additions, retirements, depreciation, and other data affecting the income of the company in the 4-year period 2023 to 2026, inclusive. The following data were ascertained. Balance of Trucks account, Jan. 1, 2023 Truck No. 1 purchased Jan. 1, 2020, cost Truck No. 2 purchased July 1, 2020, cost Truck No. 3 purchased Jan. 1, 2022, cost Truck No. 4 purchased July 1, 2022, cost Balance, Jan. 1, 2023 $19,080 23,320 31,800 25,440 $99,640 The Accumulated Depreciation-Trucks account previously adjusted to January 1, 2023, and entered in the ledger, had a balance on that date of $32,017 (depreciation on the four trucks from the respective dates of purchase, based on a 5-year life, no salvage value). No charges had been made against the account before January 1, 2023. Transactions between January 1, 2023, and December 31, 2026, which were recorded in the ledger, are as follows. July 1, 2023 Jan. 1, 2024 July 1, 2025 July 1, 2025 Truck No. 3 was traded for a larger one (No. 5), the agreed purchase price of which was $42,400. Skysong paid the automobile dealer $23,320 cash on the transaction. The entry was a debit to Trucks and a credit to Cash, $23,320. The transaction has commercial substance. Truck No. 1 was sold for $3,710 cash; entry debited Cash and credited Trucks, $3,710. A new truck (No. 6) was acquired for $44,520 cash and was charged at that amount to the Trucks account. (Assume truck No. 2 was not retired.) Truck No. 4 was damaged in a wreck to such an extent that it was sold as junk for $742 cash. Skysong received $2,650 from the insurance company. The entry made by the bookkeeper was a debit to Cash, $3,392, and credits to Miscellaneous Income, $742, and Trucks, $2,650. Entries for straight-line depreciation had been made at the close of each year as follows: 2023, $22,260; 2024, $23,850; 2025, $26,553; and 2026, $32,224. A depreciation schedule for semi-trucks of Skysong Manufacturing Company was requested by your auditor soon after December 31, 2026, showing the additions, retirements, depreciation, and other data affecting the income of the company in the 4-year period 2023 to 2026, inclusive. The following data were ascertained. Balance of Trucks account, Jan. 1, 2023 Truck No. 1 purchased Jan. 1, 2020, cost Truck No. 2 purchased July 1, 2020, cost Truck No. 3 purchased Jan. 1, 2022, cost Truck No. 4 purchased July 1, 2022, cost Balance, Jan. 1, 2023 $19,080 23,320 31,800 25,440 $99,640 The Accumulated Depreciation-Trucks account previously adjusted to January 1, 2023, and entered in the ledger, had a balance on that date of $32,017 (depreciation on the four trucks from the respective dates of purchase, based on a 5-year life, no salvage value). No charges had been made against the account before January 1, 2023. Transactions between January 1, 2023, and December 31, 2026, which were recorded in the ledger, are as follows. July 1, 2023 Jan. 1, 2024 July 1, 2025 July 1, 2025 Truck No. 3 was traded for a larger one (No. 5), the agreed purchase price of which was $42,400. Skysong paid the automobile dealer $23,320 cash on the transaction. The entry was a debit to Trucks and a credit to Cash, $23,320. The transaction has commercial substance. Truck No. 1 was sold for $3,710 cash; entry debited Cash and credited Trucks, $3,710. A new truck (No. 6) was acquired for $44,520 cash and was charged at that amount to the Trucks account. (Assume truck No. 2 was not retired.) Truck No. 4 was damaged in a wreck to such an extent that it was sold as junk for $742 cash. Skysong received $2,650 from the insurance company. The entry made by the bookkeeper was a debit to Cash, $3,392, and credits to Miscellaneous Income, $742, and Trucks, $2,650. Entries for straight-line depreciation had been made at the close of each year as follows: 2023, $22,260; 2024, $23,850; 2025, $26,553; and 2026, $32,224.