Stuck Stucky purchased a new truck on July 1, 2005 at a cost of $20,000. The truck had a life of 7 years and salvage of $6,000.00. Using the straight-line method, record the following:-

1. The purchase on July 1, 2005
2. The Depreciation for 2005
3. What is the book value of the truck at December 31, 2005, and December 31, 2006?

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To calculate the depreciation using the straight-line method, you need to determine the annual depreciation expense. This can be done by subtracting the salvage value from the cost of the truck and then dividing it by the useful life in years.

1. Purchase on July 1, 2005:
You would record this transaction by debiting the "Truck" account for $20,000.00, and crediting the "Cash" or "Accounts Payable" account for the same amount (depending on how the truck was purchased).

2. Depreciation for 2005:
Since the truck was purchased on July 1, 2005, only half a year of depreciation expense is recorded for that year. To calculate the depreciation expense for 2005, you would divide the cost of the truck (minus the salvage value) by the useful life (in years). In this case, that would be:

Depreciation Expense = (Cost - Salvage Value) / Useful Life
Depreciation Expense = ($20,000 - $6,000) / 7
Depreciation Expense = $14,000 / 7
Depreciation Expense = $2,000

Therefore, the depreciation expense for 2005 would be $2,000.

3. Book value of the truck at December 31, 2005, and December 31, 2006:
To determine the book value of the truck at a specific date, you need to subtract the accumulated depreciation from the original cost. Since the truck depreciates evenly over its useful life, the depreciation expense for each year would be the same.

At December 31, 2005:
Accumulated Depreciation = Depreciation Expense * Number of Years
Accumulated Depreciation = $2,000 * 0.5 (since half a year has elapsed)
Accumulated Depreciation = $1,000

Book Value = Cost - Accumulated Depreciation
Book Value = $20,000 - $1,000
Book Value = $19,000

At December 31, 2006:
Accumulated Depreciation = Depreciation Expense * Number of Years
Accumulated Depreciation = $2,000 * 1 (as one full year has elapsed)
Accumulated Depreciation = $2,000

Book Value = Cost - Accumulated Depreciation
Book Value = $20,000 - $2,000
Book Value = $18,000

Therefore, the book value of the truck at December 31, 2005, is $19,000, and at December 31, 2006, is $18,000.