On June 15, 2010, Jumper Corporation purchased a truck for $50, 000 with an estimated useful life of six years and a residual value of $8, 000.The company uses units-of-production depreciation and estimates the truck will last 300, 000 miles.The truck was driven 20, 000 miles in 2010 and 60, 000 miles in 2011.The accumulated depreciation balance on December 31, 2011, after the adjusting entries have been posted should be

Question

Quizplus · Accepted Answer

First, we need to calculate the depreciation rate per mile:

Depreciation rate = (cost of asset - residual value) / total estimated miles
Depreciation rate = ($50,000 - $8,000) / 300,000 = $0.14 per mile

Then, we can calculate the depreciation expense for each year:

2010 depreciation expense = 20,000 miles x $0.14 per mile = $2,800
2011 depreciation expense = 60,000 miles x $0.14 per mile = $8,400

The accumulated depreciation balance on December 31, 2011 would be the sum of the two years' depreciation expenses, which is:

Accumulated depreciation = $2,800 + $8,400 = $11,200

Therefore, the correct answer is choice C, $11,200.

On June 15, 2010, Jumper Corporation Purchased a Truck for $50