Promise Trucking Corporation uses the units-of-production depreciation method because units-of-production best measures wear and tear on the trucks. Consider these facts about one Mack truck in the company's fleet. data facts:When acquired in 2015, the rig cost $370,000and was expected to remain in service for 10 years or 1,000,000 miles. Estimated residual value was$140,000.The truck was driven 85,000 miles in 2015, 125,000miles in 2016, and 165,000 miles in 2017.After 40,000 miles, on March 15, 2018, the company traded in the Mack truck for a less expensive Freightliner. Promisealso paid cash of $28,000.Fair market value of the Mack truck was equal to its net book value on the date of the trade. Requirements: 1.Record the journal entry for depreciation expense in2018.2.DeterminePromise'scost of the new truck.3.Record the journal entry for the exchange of assets onMarchMarch15,2018.Assume the exchange had commercial substance. ### Requirement 1: Record the Journal Entry for Depreciation Expense in 2018On an educational accounting website, this section will guide students on how to record a journal entry for depreciation expense for the year 2018. #### Instructions:- **Record debits first, then credits.**- **Select the explanation on the last line of the journal entry table.**#### Journal Entry Example:**Date:** March 15**Accounts and Explanation:** 1. [Blank line for account] 2. [Blank line for account] 3. [Blank line for account] 4. [Blank line for account] 5. [Blank line for explanation]**Debit:** 1. [Blank box for the debit amount] 2. [Blank box for the debit amount] 3. [Blank box for the debit amount] 4. [Blank box for the debit amount] 5. [Blank box for the debit amount]**Credit:** 1. [Blank box for the credit amount] 2. [Blank box for the credit amount] 3. [Blank box for the credit amount] 4. [Blank box for the credit amount] 5. [Blank box for the credit amount]#### Explanation of Entries:- **Date Column:** Indicate the date of the journal entry.- **Accounts and Explanation Column:** List the account names and a brief explanation.- **Debit Column:** Input the amounts to be debited to each account.- **Credit Column:** Input the amounts to be credited to each account.### Graphs or Diagrams:There are no graphs or diagrams present in this image. The table provides a structured layout for entering financial data, essential for record-keeping and accuracy in accounting practices. This structured approach will help students familiarize themselves with the process of recording depreciation expenses as part of their accounting education.

Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to…

Answered: Record the journal entry for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Promise Trucking Corporation uses the units-of-production depreciation method because units-of-production best measures wear and tear on the trucks. Consider these facts about one Mack truck in the company's fleet.

data facts:

When acquired in 2015, the rig cost $370,000
and was expected to remain in service for 10 years or 1,000,000 miles. Estimated residual value was

$140,000.

The truck was driven 85,000 miles in 2015, 125,000
miles in 2016, and 165,000 miles in 2017.
After 40,000 miles, on March 15, 2018, the company traded in the Mack truck for a less expensive Freightliner.

Promise

also paid cash of $28,000.
Fair market value of the Mack truck was equal to its net book value on the date of the trade.

Requirements:

1.	Record the journal entry for depreciation expense in 2018.
2.	Determine Promise's cost of the new truck.
3.	Record the journal entry for the exchange of assets on MarchMarch 15, 2018. Assume the exchange had commercial substance.

### Requirement 1: Record the Journal Entry for Depreciation Expense in 2018

On an educational accounting website, this section will guide students on how to record a journal entry for depreciation expense for the year 2018.

#### Instructions:
- **Record debits first, then credits.**
- **Select the explanation on the last line of the journal entry table.**

#### Journal Entry Example:

**Date:**
March 15

**Accounts and Explanation:**
1. [Blank line for account]
2. [Blank line for account]
3. [Blank line for account]
4. [Blank line for account]
5. [Blank line for explanation]

**Debit:**
1. [Blank box for the debit amount]
2. [Blank box for the debit amount]
3. [Blank box for the debit amount]
4. [Blank box for the debit amount]
5. [Blank box for the debit amount]

**Credit:**
1. [Blank box for the credit amount]
2. [Blank box for the credit amount]
3. [Blank box for the credit amount]
4. [Blank box for the credit amount]
5. [Blank box for the credit amount]

#### Explanation of Entries:
- **Date Column:** Indicate the date of the journal entry.
- **Accounts and Explanation Column:** List the account names and a brief explanation.
- **Debit Column:** Input the amounts to be debited to each account.
- **Credit Column:** Input the amounts to be credited to each account.

### Graphs or Diagrams:
There are no graphs or diagrams present in this image. The table provides a structured layout for entering financial data, essential for record-keeping and accuracy in accounting practices.

This structured approach will help students familiarize themselves with the process of recording depreciation expenses as part of their accounting education.

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