# Accounting: Brainiac Company

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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

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