Mays Corporation Purchased a New Truck on January 1,2016 for $65,000

question 20

Essay

Mays Corporation purchased a new truck on January 1,2016 for $65,000 cash.Mays estimated salvage value of $10,000 at the end of the useful life of 5 years.On January 1,2018 Mays had to replace the engine of the truck paying $4,000 cash.Due to the replaced engine,Mays estimates that the truck will continue a productive life for another four years.
Required:
a)Prepare the journal entry to record the cost of the new engine.
b)Assuming straight-line depreciation is used,calculate the depreciation expense for 2018.

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Definitions:

Supply

The total amount of a product or service available for purchase at any given price level in a given market.

Fiscal Policy

Government policies regarding taxation and spending that aim to influence economic conditions, such as growth rates, inflation, and unemployment.

GDP

Gross Domestic Product, a monetary measure of the market value of all the final goods and services produced in a specific time period within a country's borders.

New Deal

A series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States during the 1930s in response to the Great Depression.