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Sheridan Company purchased a delivery truck for $36,000 on July 1, 2022. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2022 and 12,000 in 2023. Sheridan uses the straight-line method of depreciation. What is the amount of accumulated depreciation at December 31, 2023, if the straight-line method of depreciation is used?$78,000$80,000(x)$156,000$160,000

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Answer:

The amount of accumulated depreciation at December 31, 2023 is $6,375

Explanation:

Sheridan Company uses the straight-line depreciation, Depreciation Expense each year is calculated by following formula:  

Annual Depreciation Expense = (Cost of delivery truck − Salvage Value)/Useful Life = ($36,000-$2,000)/8 = $4,250

Depreciation Expense in 2022 = ($4,250/12) x 6 = $2,125

Depreciation Expense in 2023 = $4,250

Accumulated depreciation at December 31, 2023 = Depreciation Expense in 2022 + Depreciation Expense in 2023 = $2,125 + $4,250 = $6,375

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