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Homework answers / question archive / A roofing company purchased a work truck for $22,000 on 1/1
A roofing company purchased a work truck for $22,000 on 1/1. The truck is expected to have a 3 year life and last 100,000 miles with a salvage (residual) value of $6,000. The truck was driven 25,000 in year 1. If the company uses the activity based method to calculate depreciation expense, how much would the depreciation expense be for the first year of use? Fill in the blank with your calculated number. DO NOT include commas, $ signs, period, decimal points, etc., just enter the raw number. Webcourses will add commas to your answer automatically. For example, if you calculated the answer to be $24,123, you would only input: 24123 4.75 pts Question 18 Using the % of aging-of-accounts receivable to estimate uncollectible accounts, The Valley Corporation estimates a target balance of $10,801 of its total accounts receivable that will be uncollectible. Prior to adjustment, the Allowance for Uncollectible accounts has a credit balance of $3,000. When recording the journal entry to make this adjustment, what is the amount of the debit for bad debt expense? Fill in the blank with your calculated number. DO NOT include commas, $ signs, period, decimal points, etc., just enter the raw number. Webcourses will add commas to your answer automatically ante if you calculated the answer to be $24,123, you would only input: 24123
1)
Cost = 22000
Salvage value = 6000
Actual activity = 25000
Total level of activity = 100000
Year 1 depreciation
= ( Cost - Salvage value )*Actual activity / total activity
= ( 22000 - 6000)*25000/ 100000
= 4000
Therefore year 1 depreciation = 4000
2)
Allowance for uncollectible account = 10801
Credit balance of allowance for uncollectible account = 3000
Therefore as there is a credit balance in the allowance for uncollectible account therefore such amount is already recorded as bad debts expense and thus it will be deducted from the current uncollectible account.
Therefore amount of debit to bad debts expense will be
= 10801 - 3000
= 7801
