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University Car Wash built a deluxe car wash across the street from campus. The new machines cost $270,000 including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows:

Year Hours Used
1 3,100
2 1,100
3 1,200
4 2,800
5 2,600
6 1,200

Prepare a depreciation schedule for six years using the straight-line method.

Respuesta :

Explanation:

The preparation of depreciation schedule is shown below:-

1. Depreciation expense on straight line = $270,000 -$24,000 ÷ 6

= $41,000

Depreciation Schedule - Straight Line Method

End of Year amounts

Year Depreciation  Accumulated     Book Value

               Expense         Depreciation

1           $41,000  $41,000               $229,000

2          $41,000           $82,000        $188,000

3          $41,000  $123,000         $147,000

4          $41,000          $164,000         $106,000

5          $41,000           $205,000         $65,000

6          $41,000      $246,000                 $24,000

Total = $246,000    

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