FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Situation 2: Malcolm Limited acquired a truck to deliver and install its specialized
products at the customer's site. The vehicle's list price was $135,000, but customization
added another $30,000 in costs. Malcolm took delivery of the truck on September 30,
2020, with a down payment of $15,000, signing a four-year, 8.0% note for the
remainder, payable in equal payments of $43,488 beginning September 30, 2021.
Malcolm expected the truck to be usable for 500 deliveries and installations. After that,
the product's technology would have changed and made the vehicle obsolete. In late
July 2023, the truck was destroyed when a concrete garage collapsed. Malcolm used
the truck for 45 deliveries in 2020, 125 in 2021, 134 in 2022, and 79 in 2023. The
company received a cheque for $12,000 from the insurance company and paid what
remained on the note.
Required #2:
Prepare all entries that are needed to record the events and activities related to the
truck, the note, and its interest, including the depreciation expense on the truck each
year. Assume that Malcolm uses an activity approach to depreciate the truck, and bases
it on deliveries. Round all amounts to the nearest dollar.
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