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The Borrell Company purchased four delivery trucks on January 2, 2010 for $22,000 each. The company expected two of the trucks to last five years and have a residual value of $3,500 each. The other two trucks had an expected life of eight years and no residual value. The company uses straight line depreciation on a composite basis.
Required:
Prepare journal entries to record the following events:1. January 1, 2012. One of the two trucks expected to last five years is destroyed in an accident. The truck was not insured and the scrap value is $400.2. January 5, 2012. A new truck is acquired for $26,000. It has an expected life of four years and a residual value of $3,920.3. Depreciation expense for 2012.
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