Question

The following transactions and adjusting entries were completed by Legacy Furniture Co. during a three-year period. All are related to the use of delivery equipment. The double-declining-balance method of depreciation is used.

Year 1
Jan. 4.	Purchased a used delivery truck for $27,200, paying cash.
Nov. 2.	Paid garage $630 for miscellaneous repairs to the truck.
Dec. 31.	Recorded depreciation on the truck for the year. The estimated useful life of the truck is four years, with a residual value of $5,005 for the truck.
Year 2
Jan. 6.	Purchased a new truck for $49,250, paying cash.
Apr. 1.	Sold the used truck for $14,670. (Record depreciation to date in Year 2 for the truck.)
June 11.	Paid garage $450 for miscellaneous repairs to the truck.
Dec. 31.	Record depreciation for the new truck. It has an estimated residual value of $8,950 and an estimated life of five years.
Year 3
July 1.	Purchased a new truck for $53,920, paying cash.
Oct. 2.	Sold the truck purchased January 6, Year 2, for $17,125. (Record depreciation to date for Year 3 for the truck.)
Dec. 31.	Recorded depreciation on the remaining truck. It has an estimated residual value of $12,945 and an estimated useful life of eight years.

CHART OF ACCOUNTS
Legacy Furniture Co.
General Ledger
ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 123 Delivery Truck 124 Accumulated Depreciation-Delivery Truck 125 Equipment 126 Accumulated Depreciation-Equipment 130 Mineral Rights 131 Accumulated Depletion 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends	REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale of Delivery Truck 621 Gain on Sale of Equipment EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Delivery Truck 523 Delivery Expense 525 Truck Repair and Maintenance Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Equipment 533 Depletion Expense 534 Amortization Expense-Patents 535 Insurance Expense 536 Supplies Expense 539 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Delivery Truck 721 Loss on Sale of Equipment

Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 2 and 3 of the journal. Do not round intermediate calculations.

Journalize the Year 1 transactions and adjusting entries on Page 1.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5		Adjusting Entries
6
7

Journalize the Year 2 transactions and adjusting entries on Page 2.

PAGE 2

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7
8
9
10
11		Adjusting Entries
12
13

Journalize the Year 3 transactions and adjusting entries on Page 3.

PAGE 3

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7
8
9		Adjusting Entries
10
11

Answer 1

	year 1
	4-Jan	Delivery Truck				27,200
		Cash						27,200
	2-Nov	Truck repair expense				630
		Cash						630
	31-Dec	Depreciation expense -Delivery Truck		13600
		Accumulated depreciation-Delivery Truck			13600
	year 2
	6-Jan	Delivery Truck				49,250
		cash						49,250
	1-Apr	Depreciation expense -Delivery Truck		1700
		Accumulated depreciation-Delivery Truck			1,700
	1-Apr	Accumulated depreciation-Delivery Truck		15300
		Cash					14,670
		Gain on sale of Delivery truck				2,770
		Delivery Truck					27,200
	11-Jun	Truck repair expense				450
		Cash						450
	31-Dec	Depreciation expense -Delivery Truck		19700
		Accumulated depreciation-Delivery Truck			19700
	year 3
	1-Jul	Delivery Truck				53,920
		cash						53,920
	2-Oct	Depreciation expense -Delivery Truck		8865
		Accumulated depreciation-Delivery Truck			8865
	2-Oct	Cash					17,125
		Accumulated depreciation-Delivery Truck		28565
		loss on sale of Delivery truck			3,560
		Delivery Truck					49,250
	31-Dec	Depreciation expense -Delivery Truck		6740
		Accumulated depreciation-Delivery Truck			6,740
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