Question

Transactions for Fixed Assets, Including Sale The following transactions and adjusting entries were completed by Robinson 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. 8. Purchased a used delivery truck for $48,600, paying cash.

Mar. 7. Paid garage $190 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck.

Dec. 31. Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is 9 years, with a residual value of $10,200 for the truck.

Year 2

Jan. 9. Purchased a new truck for $55,860, paying cash.

Feb. 28. Paid garage $340 to tune the engine and make other minor repairs on the used truck.

Apr. 30. Sold the used truck for $33,600. (Record depreciation to date in Year 2 for the truck.)

Dec. 31. Record depreciation for the new truck. It has an estimated trade-in value of $10,100 and an estimated life of 7 years.

Year 3

Sept. 1. Purchased a new truck for $84,000, paying cash.

Sept. 4. Sold the truck purchased January 9, Year 2, for $34,000. (Record depreciation to date in Year 3 for the truck.)

Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $15,100 and an estimated useful life of 10 years.

Required: Journalize the transactions and the adjusting entries. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations. Round your final answers to the nearest cent.

Year 1

Jan. 8 Delivery Truck 48,600 Cash 48,600

Mar. 7 Truck Repair Expense 190 Cash 190

Dec. 31 Depreciation Expense-Delivery Truck Accumulated Depreciation-Delivery Truck

Year 2

Jan. 9 Delivery Truck 55,860 Cash 55,860

Feb. 28 Truck Repair Expense 340 Cash 340

Apr. 30-Deprec. Apr. 30-Sale Dec. 31

Year 3

Sept. 1 Delivery Truck 84,000 Cash 84,000

Sept. 4-Deprec.

Sept. 4-Sale Dec. 31

Answer 1

	Date	Account tiltes and explanation			Debit	Credit
	Year 1
	Dec 31.	Depreciation Expense-Delivery Truck			4267
		Accumulated Depreciation-Delivery Truck				4267
		(Note:1)
		(Depreciation expense recorded)
	Year 2
	Apr 30.	Depreciation Expense-Delivery Truck			1422
		Accumulated Depreciation-Delivery Truck				1422
		(Note:2)
		(Depreciation expense recorded)
	Apr 30.	Cash			33600
		Accumulated Depreciation-Delivery Truck			5689
		Loss on sale of delivery truck (Balancing figure)			9311
		Delivery Truck				48600
		(Delivery truck sold)
	Dec 31.	Depreciation Expense-Delivery Truck			6537
		Accumulated Depreciation-Delivery Truck				6537
		(Note:3)
		(Depreciation expense recorded)
	Year 3
	Sept 4.	Depreciation Expense-Delivery Truck			4903
		Accumulated Depreciation-Delivery Truck				4903
		(Note:4)
		(Depreciation expense recorded)
	Sept 4.	Cash			34000
		Accumulated Depreciation-Delivery Truck			11440
		Loss on sale of delivery truck (Balancing figure)			10420
		Delivery Truck				55860
		(Delivery truck sold)
	Dec 31.	Depreciation Expense-Delivery Truck			6890
		Accumulated Depreciation-Delivery Truck				6890
		(Note:5)
		(Depreciation expense recorded)
	Notes:
	1. Depreciation under SLM=(Original cost-Residual value)/Useful life=(48600-10200)/9=4267
	2. Depreciation till Apr.30 (For 4 months=4267*4/12=1422
	3. Depreciation under SLM=(Original cost-Residual value)/Useful life=(55860-10100)/7=6537
	4. Depreciation till Sept.4 (For 9 months=6537*9/12=4903
	5. Depreciation under SLM=(Original cost-Residual value)/Useful life=(84000-15100)/10=6890