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1. Crane Chemicals Company acquires a delivery truck at a cost of $31,400 on January 1, 2022. The truck is expected to have a salvage value of $2,900 at the end of its 5-year useful life. Compute annual depreciation for the first and second years using the straight-line method.
2. On January 1, 2017, Salt Creek Country Club purchased a new riding mower for $17,500. The mower is expected to have a 10-year life with a $600 salvage value. What journal entry would Salt Creek make on December 31, 2017, if it uses straight-line depreciation?

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Respuesta :

Answer:

1. $5,700

2.

Dr depreciation expense $1,690

Cr accumulated depreciation $1,690

Explanation:

Crane Chemicals Company:

Under the straight-line method, the amount of depreciation remains the same over the useful life of the asset, in other words, the depreciation expense for 1 year to year 5 would be the same.

annual depreciation=(cost-salvage value)/useful life

annual depreciation=($31,400-$2,900)/5=$5,700

Salt Creek Country Club

annual depreciation=(cost-salvage value)/useful life

annual depreciation=( $17,500-$600)/10=$1,690

The journal entries for depreciation would be a debit to depreciation expense and a credit to accumulated depreciation accounts

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