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 $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.
Year 2
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 Year 2 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.
Year 3
July 1.	Purchased a new truck for $55,520, paying cash.
Oct. 2.	Sold the truck purchased January 6, Year 2, for $17,473. (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 $12,565 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.

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

Answer 1

Date	Account explanation	Debit	Credit
Year 1
Jan-01	Delvery Truck	$                       26,960
	Cash		$                             26,960
	(to used delivery truck purchased)
Nov-02	Repair expense	$                            600
	Cash		$                                  600
	(to repair expense made to used truck)
Dec-31	Depreciation expenses($26,960*50%)	$                       13,480
	Accumulated Depreciation-Delivery Truck		$                             13,480
	(to depreciation charged for Year 1)
Year 2
Jan-06	Equipment	$                       50,150
	Cash		$                             50,150
	(to new delivery truck purchased)
Apr-01	Depreciation expenses[($26,960-$13,480)*50%*3/12]	$                         1,685
	Accumulated Depreciation-Delivery Truck		$                               1,685
	(to depreciation charged on old truck for Year 2)
Apr-01	Cash	$                       14,400
	Accumulated Depreciation-Delivery Truck	$                       15,165
	Delivery Truck		$                             26,960
	Gain on Sale of Delivery Truck		$                               2,605
	(to used delivery truck sold at profit)
Jun-11	Repair expense	$                            465
	Cash		$                                  465
	(to repair expense made to used truck)
Dec-31	Depreciation expenses($50,150*40%)	$                       20,060
	Accumulated Depreciation-Equipment		$                             20,060
	(to depreciation charged on New Truck for Year 2)
Year 3
Jul-01	Equipment	$                       55,520
	Cash		$                             55,520
	(to new delivery truck purchased)
Oct-02	Depreciation expenses[($50,150-$20,060)*40%*9/12]	$                         9,027
	Accumulated Depreciation-Equipment		$                               9,027
	(to depreciation charged on new truck for 9 months for Year 2)
Oct-02	Cash	$                       17,473
	Accumulated Depreciation-Equipment	$                       29,087
	Loss on Sale of Equipmet	$                         3,590
	Delivery Truck		$                             50,150
	(to used new truck sold at loss)
Dec-31	Depreciation expenses($55,520*25%)	$                       13,880
	Accumulated Depreciation-Equipment		$                             13,880
	(to depreciation charged on New Truck for Year 3)