Prompt Truck Company is a large trucking company that operates throughout the United States. Prompt Truck Company uses the units-of-production (UOP) method to depreciate its trucks. Prompt Truck Compeny trades in truckS often to keep driver morale high and to maximize fuel economy. Consider these facts about one Mack truck in the company's fleet. When acquired in 20X6, the tractor-trailer rig cost $390,000 and was expected to remain in service for 10 years or 1,000,000 miles. Estimated residual value was $100,000 During 20X6, the truck was driven 78,000 miles, during 20X7, 118,000 miles and during 20XB, 156,000 miles. After 38 000 miles in 20X9, the company traded in the Mack truck for a loss expensive Freightliner with a sticker price of S300,000, Prompt Truck Company paid cash of $27 000 Requirements 1. Determine Prompt's gain or loss on the transaction 2 Prepare the journal entry to record the trade-in of the old truck for the new one. Requirement 1. Determine Prompt's gain or loss on the transaction Begin by determining the formula needed to calculate the gain or loss and then complete the calculation to determine the amount. (Use a minus sign or parentheses for a loss Round depreciation per unit to the nearest cent.) Gain (Loss) on oxchango
Prompt Truck Company is a large trucking company that operates throughout the United States. Prompt Truck Company uses the units-of-production (UOP) method to depreciate its trucks. Prompt Truck Compeny trades in truckS often to keep driver morale high and to maximize fuel economy. Consider these facts about one Mack truck in the company's fleet. When acquired in 20X6, the tractor-trailer rig cost $390,000 and was expected to remain in service for 10 years or 1,000,000 miles. Estimated residual value was $100,000 During 20X6, the truck was driven 78,000 miles, during 20X7, 118,000 miles and during 20XB, 156,000 miles. After 38 000 miles in 20X9, the company traded in the Mack truck for a loss expensive Freightliner with a sticker price of S300,000, Prompt Truck Company paid cash of $27 000 Requirements 1. Determine Prompt's gain or loss on the transaction 2 Prepare the journal entry to record the trade-in of the old truck for the new one. Requirement 1. Determine Prompt's gain or loss on the transaction Begin by determining the formula needed to calculate the gain or loss and then complete the calculation to determine the amount. (Use a minus sign or parentheses for a loss Round depreciation per unit to the nearest cent.) Gain (Loss) on oxchango
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Prompt Truck Company is a large trucking company that operates throughout the United States. Prompt Truck Company uses the units-of-production (UOP) method to depreciate its trucks. Prompt Truck Company
trades in trucks often to keep driver morale high and to maximize fuel economy. Consider these facts about one Mack truck in the company's fleet, When acquired in 20X6, the tractor-trailer rig cost $390,000 and
was expected to remain in service for 10 years or 1,000,000 miles. Estimated residual value was $100,000. During 20X6, the truck was driven 78,000 miles, during 20X7, 118,000 miles; and during 20X8, 156,000
miles. After 38 000 miles in 20X9, the company traded in the Mack truck for a less expensive Freightliner with a sticker price of S300,000. Prompt Truck Company paid cash of $27,000
Requirements
1. Determine Prompt's gain or loss on the transaction.
2. Prepare the journal entry to record the trade-in of the old truck for the new one.
Requirement 1. Determine Prompt's gain or loss on the transaction
Begin by determining the formula needed to calculate the gain or loss and then complete the calculation to determine the amount. (Use a minus sign or parentheses for a loss. Round depreciation per unit to the
nearest cent)
Inc
Gain (Loss) on exchange
static)
Jar to) (
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education