Question

prior to adjustment at the end of the year, the balance in trucks is $296,900 and the balance in accumulated depreciation—trucks is $99,740. details of the subsidiary ledger are as follows:

Answer 1

The current account balance also takes global money flows into account, showing a -$419 billion balance in the example. For the firm in question, the accounting profit is calculated at $50,000 after deducting expenses from sales revenue.

Step-by-step explanation:

The merchandise balance of trade is a key economic indicator representing the difference between a country's exports and imports of goods. When exports exceed imports, a country has a trade surplus; conversely, when imports exceed exports, it results in a trade deficit. In this scenario, the merchandise balance of trade shows a deficit of -$516 billion because imports of $1,562 billion surpass exports of $1,046 billion.

The current account balance offers a broader perspective on a country's financial health by including the trade balance, and also accounts for net income from abroad and net current transfers. The current account balance is reported as -$419 billion, meaning that the country is spending more on foreign trade and investments than it is earning.

When analyzing firm's profitability like in the self-check question, accounting profit is calculated by subtracting total expenses from sales revenue. In the given example, a firm with sales revenue of $1 million and total expenses of $950,000 (sum of labour, capital, and materials expenditures) would yield an accounting profit of $50,000.

Answer 2

Depreciation by Units-of-Output Method

a. Depreciation Rates and Accumulated Depreciation:

Truck No. Estimated Useful Life Residual Value Cost - Residual Value Miles Operated Rate per Mile Credit to Accumulated Depreciation

1 250,000 miles $15,000 $65,000 21,000 miles $0.26/mile $5,460

2 300,000 miles $6,000 $48,000 33,500 miles $0.16/mile $5,360

3 200,000 miles $10,900 $62,000 8,000 miles $0.31/mile $2,480

4 240,000 miles $22,800 $67,200 22,500 miles $0.28/mile $6,300

Total $19,600

b. Journal Entry for Depreciation:

Date: December 31, 2023

Account Title Debit Credit

Depreciation Expense - Trucks $19,600

Accumulated Depreciation - Trucks $19,600

The Complete Question

Depreciation by units-of-output method

Prior to adjustment at the end of the year, the balance in Trucks is $296,900 and the balance in Accumulated Depreciation—Trucks is $99,740. Details of the subsidiary ledger are as follows:

Accumulated

Miles

Estimated

Estimated

Depreciation

Operated

Truck

Residual

Useful

at Beginning

During

No.

Cost

Value

Life

of Year

Year

1

$80,000

$15,000

250,000 miles

—

21,000 miles

2

54,000

6,000

300,000

$14,400

33,500

3

72,900

10,900

200,000

60,140

8,000

4

90,000

22,800

240,000

25,200

22,500

a. Determine the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the subsidiary accounts for the miles operated during the current year.

Truck No. Rate per Mile (in cents) Miles Operated Credit to Accumulated Depreciation

1 $ 21,000 $

2 33,500

3 8,000

4 22,500

Total $

b. Journalize the entry to record depreciation for the year.