Coyote Manufacturing bought a delivery truck for $50,000 on July 1, 2017. The registration fee for the
Question:
Coyote Manufacturing bought a delivery truck for $50,000 on July 1, 2017. The registration fee for the truck was $4,000. Coyote also spent $2,000 to paint its logo on the truck. Coyote estimated that the useful life would be four years or 200,000 miles and the residual value at the end of the useful life be $3,000. The mileage to be added to this truck during its useful life are
2017 2018 2019 2020 2021
30,000 54,000 52,000 44,000 20,000
Instructions:
- Prepare journal entries for the purchase of the truck on July 1. 2017.
- Compute depreciation expenses on the truck for the years ending on December 31 of 2017 and 2018 using the following methods; 1) Straight-line method,
2) Activity-based method,
3) Sum-of-the-years'-digit,
4) Double declining method.
3. Coyote sold this truck for $20,000 on January 1, 2019
- Prepare any necessary journal entries for this sale using
1) the sum-of-years-digit method.
2) the double-declining balance method
Expert Answer:
