March 1st, 2020:You are working for Acc&Ting as an accounting clerk. Your superior, John Smith asks you to create areport for a client, Latte, a small restaurant with delivery service. The owner is unsure about thetreatment of the transactions concerning the new and old delivery trucks and is eager to find out whatyou would recommend him as a depreciation method for the new delivery truck.Latte is using the calendar year as its financial year (1st of January to 31st of December).PART AIn order to improve its delivering service, Latte bought a delivery truck for $120,000 on the 1st ofNovember 2019. On that day, it has also incurred:- $1,500 cost in order to add the company logo on the truck,- $4,500 to customize the trailer to company needs (shelves and refrigerated section),- $1,600 of (annual) registration cost and- $350 for the first payment of the monthly insurance (paid cash every 1st of the month).The residual value is estimated at $5,000 and the useful life at 4 years.Estimated kilometers usage is such as:Year Kilometers2019 12 0002020 74 0002021 69 0002022 71 0002023 58 000Instructions:a. Prepare the journal entry of the 1st of November to record the purchase of the truck anddifferent fees.b. Prepare a depreciation table for the following years for each of the three depreciation methods.c. Prepare the depreciation entry needed for the 31st of December 2019 using the straight-linemethod.d. Which one of the three methods would you recommend Latte to use and why?PART BBeing happy about the effectiveness of the new truck, on the 1st of December 2019, Latte sold their oldtruck for $17,000. The truck had been bought on June 1st, 2016 for a total cost of $90,000, an estimatedresidual value of $5,000 and estimated useful life of 4 years. The company used the straight-linedepreciation method.Instructions:a. Prepare the journal entries of the 1st of December to record the sale of the old truck (show yourcalculation).b. Explain the impact of the sale on Latte’s financial statements.___________________________________________________________________________________Round any dollar amounts to 2 decimals and any rate to 3 decimals.Work must be submitted through myCourses or via email at
[email protected] byMarch 12, 2020, 4pm. No late assignment will be accepted. Professionalism, respect of accountingnorms, exactitude and clarity of the report will all be considered in the mark.