Dawson Towing Company purchased a used panel truck for USD 28,800 cash. The next day the company”s name and business were painted on the truck at a total cost of USD 1,488. The truck was then given a minor overhaul at a cost of USD 192, and new “super” tires were mounted on the truck at a cost of USD 1,920, less a trade-in allowance of USD 240 for the old tires. The truck was placed in service on 2009 April 1, at which time it had an estimated useful life of five years and a salvage value of USD 3,360.
a. Prepare a schedule showing the cost to be recorded for the truck.
b. Prepare the journal entry to record depreciation at the end of the calendar-year accounting period, 2009 December 31. Use the double-declining-balance method.
c. Assume that the straight-line depreciation method has been used. At the beginning of 2009 it is estimated the truck will last another four years. The estimated salvage value changed to USD 1,920. Prepare the entry to record depreciation for 2012.