Question

The following transactions, adjusting entries, and closing 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.

2014
Jan. 4.	Purchased a used delivery truck for $26,960, paying cash.
Nov. 2.	Paid garage $600 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 $5,250 for the truck.
2015
Jan. 6.	Purchased a new truck for $50,150, paying cash.
Apr. 1.	Sold the used truck for $14,400. (Record depreciation to date in 2015 for the truck.)
June 11.	Paid garage $465 for miscellaneous repairs to the truck.
Dec. 31.	Record depreciation for the new truck. It has an estimated residual value of $8,850 and an estimated life of five years.
2016
July 1.	Purchased a new truck for $55,520, paying cash.
Oct. 2.	Sold the truck purchased January 6, 2015, for $17,473. (Record depreciation to date for 2016 for the truck.)
Dec. 31.	Recorded depreciation on the remaining truck. It has an estimated residual value of $12,565 and an estimated useful life of eight years.

Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles. Be sure to include the YEAR in the date for the FIRST transaction on each page.

Chart of Accounts

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 Owner, Capital 311 Owner, Drawing 312 Income Summary	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 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

Journal

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. Be sure to include the YEAR in the date for the FIRST transaction on each page.

Journalize the 2014 transactions and adjusting entries on Page 1. Be sure to include the YEAR in the date for the FIRST transaction.

PAGE 1

JOURNAL

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

Journalize the 2015 transactions and adjusting entries on Page 2. Be sure to include the YEAR in the date for the FIRST transaction.

PAGE 2

JOURNAL

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

Journalize the 2016 transactions and adjusting entries on Page 3. Be sure to include the YEAR in the date for the FIRST transaction.

PAGE 3

JOURNAL

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

Answer 1

2014
04-Jan-14	Delivery truck	26960
	Cash		26960
02-Nov	Truck repair expense	600
	cash		600
	Adjusting entry	Double declining = 4 years = 1*200%/4 = 50%
31-Dec	Depreciatione expense-delivery truck	13480	(26960*50%)
	accumulated depreciation- delivery truck		13480
2015
06-01-2015	Delivery truck	50150
	Cash		50150
01-Apr-15	Depreciation expense-delivery truck	1685	(13480*50%*3/12)
	accumulated depreciation -delivery truck		1685
01-Apr-15	cash	14400
	accumulated depreciation -delivery truck	15165
	Delivery truck		26960
	Gain on sale of delivery truck		2605
11-Jun	Truck repair expense	465
	cash		465
	Adjusting entry	Double declining = 5 years = 1*200%/5 = 40%
31-Dec	Depreciatione expense-delivery truck	20060	(50150*40%)
	accumulated depreciation- delivery truck		20060
2016
01-Jul-16	Delivery truck	55520
	Cash		55520
02-Oct	Depreciation expense-delivery truck	9027	(50150-20060)*40%*9/12
	accumulated depreciation -delivery truck		9027
02-Oct	cash	17473
	accumulated depreciation -delivery truck	29087
	Loss on sale of delivery truck	3590
	Delivery truck		50150
	Adjusting entry	Double declining = 8 years = 1*200%/8 = 25%
31-Dec	Depreciatione expense-delivery truck	6940	(55520*25%*6/12)
	accumulated depreciation- delivery truck		6940