Accounting: Brainiac Company

E9-7 Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011.The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years.Actual miles driven were 15,000 in 2011 and 12,000 in 2012.
Instructions
(a) Compute depreciation expense for 2011 and 2012 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining balance method.
(b) Assume that Brainiac uses the straight-line method.
(1) Prepare the journal entry to record 2011 depreciation.
(2) Show how the truck would be reported in the December 31, 2011, balance sheet.
Straight-line depreciation rate ($30,000 - $2,000) / 8 years = $3,500 per year
Straight-line depreciation for 2010 $3,500
Straight-line depreciation for 2011 $3,500
Units-of-Activity depreciation rate ($30,000 - $2,000) / 100,000 miles = $.28 per mile
Units-of-Activity depreciation for 2010 $4,200 (15,000 miles x $.28 per mile)
Units-of-Activity depreciation for 2011 $3,360 (12,000 miles x $.28 per mile)
Double declining balance depreciation rate (1 / 8) x 2 = 25%
Double declining balance depreciation for 2010 $7,500 ($30,000 * 25%)
Double declining balance depreciation for 2011 $5,625 [($30,000 - $7,500) x 25%]
(1)
Debit Depreciation Expense $3,500
Credit Accumulated Depreciation - Delivery Truck $3,500
(2)
Brainiac Company
Partial Balance Sheet
December 31, 2010
Assets
Property, Plant and Equipment
Delivery Truck $30,000
Less Accumulated Depreciation $3,500
Book Value $26,500

E10-5 Don Walls’s gross earnings for the week were $1,780, his federal income tax withholding was $301.63, and his FICA total was $135.73.
Instructions
(a) What was Walls’s net pay for the week?
(b) Journalize the entry for the recording of his pay in the general journal. (Note: Use Salaries
Payable; not Cash.)
(c) Record the issuing of the check for Walls’s pay in the general journal.
a. Gross – taxes = Net pay