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The following transactions and adjusting entries were completed by Legacy Furniture Co. during a three-year period....

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 $28,000, paying cash. Nov. 2 Paid garage $635 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 $4,640 for the truck. Year 2 Jan. 6 Purchased a new truck for $49,400, paying cash. Apr. 1 Sold the used truck purchased on Jan. 4 of Year 1 for $15,180. (Record depreciation to date in Year 2 for the truck.) June 11 Paid garage $470 for miscellaneous repairs to the truck. Dec. 31 Recorded depreciation for the new truck. It has an estimated residual value of $9,470 and an estimated life of five years. Year 3 July 1 Purchased a new truck for $55,400, paying cash. Oct. 2 Sold the truck purchased January 6, Year 2, for $17,498. (Record depreciation to date for Year 3 for the truck.) Dec. 31 Recorded depreciation on the remaining truck purchased on July 1. It has an estimated residual value of $12,955 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. Scroll down to access pages 2 and 3 of the journal.

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

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2

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4

5

Adjusting Entries

6

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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

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2

3

4

5

6

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8

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10

11

Adjusting Entries

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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

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Adjusting Entries

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Solutions

Expert Solution

Year 1
Date Description Post.Ref Debit Credit Assets Liabilities Equity
4-Jan Delivery Truck $28,000 $28,000 0 $0
Cash $28,000 ($28,000) 0 0
2-Nov Truck Repair Expense $635 0 0 ($635)
Cash $635 ($635) 0 0
31-Dec Depreciation Expense - Delivery Truck $14,000 ($14,000)
Accumulated Depreciation - Delivery Truck $14,000 ($14,000)
Delivery Truck Depreciation
(28000-4640)/4 5840
Depreciation Rate = 5840/23360 25.00%
Double Declining Rate = 25%*2 50%
Depreciation = 28000*50%
Year 2
Date Description Post.Ref Debit Credit Assets Liabilities Equity
6-Jan Delivery Truck $49,400 $49,400
Cash $49,400 ($49,400)
1-Apr Depreciation Expense - Delivery Truck 1750 ($1,750)
Accumulated Depreciation -Delivery Truck 1750 ($1,750)
(28000-14000)*50%*3/12
1-Apr Accumulated Depreciation - Delivery Truck $15,750 $15,750
Cash $15,180 $15,180
To Delivery Truck 28000 ($28,000)
To Gain on sale of Delivery Truck $2,930 $2,930
11-Jun Truck Repair Expense $470 ($470)
To Cash $470 ($470)
31-Dec Depreciation Expense - Delivery Truck $19,760 ($19,760)
Accumulated Depreciation -Delivery Truck $19,760 ($19,760)
Delivery Truck Depreciation
(49400-9470)/5 7986
Depreciation Rate = 7986/39930 20.00%
Double Declining Rate = 20%*2 40%
Depreciation = 49400*40% 19760
Year 3
Date Description Post.Ref Debit Credit Assets Liabilities Equity
1-Jul Delivery Truck $55,400 $55,400
To Cash $55,400 ($55,400)
2-Oct Depreciation Expense - Delivery Truck $8,892 ($8,892)
Accumulated Depreciation -Delivery Truck $8,892 ($8,892)
(49400-19760)*40%*9/12
2-Oct Accumulated Depreciation - Delivery Truck $28,652
Cash $17,498
Loss on Sale of Delivery Truck $3,250
To Delivery Truck $49,400
31-Dec Depreciation Expense - Delivery Truck $6,925.00 ($6,925.00)
Accumulated Depreciation -Delivery Truck $6,925.00 ($6,925.00)
Delivery Truck Depreciation
(55400-12955)/8 5305.625
42445 Depreciation Rate = 5305.625/42445 0.125
Double Declining Rate = 12.5%*2 25%
Depreciation = (55400*25%*6/12) 6925

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