Question

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. Thedouble-declining-balance method of depreciation is used.

Year 1
Jan. 8.	Purchased a used delivery truck for $61,440, paying cash.
Mar. 7.	Paid garage $230 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 8 years, with a residual value of $12,900 for the truck.
Year 2
Jan. 9.	Purchased a new truck for $70,560, paying cash.
Feb. 28.	Paid garage $260 to tune the engine and make other minor repairs on the used truck.
Apr. 30.	Sold the used truck for $40,440. (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 $12,700 and an estimated life of 7 years.
Year 3
Sept. 1.	Purchased a new truck for $85,000, paying cash.
Sept. 4.	Sold the truck purchased January 9, Year 2, for $42,900. (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 $15,300 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.

Answer 1

Prepare the Journal entries as shown below :
Year 1 :
Date	Accounts Title and Explaination	Ref.	Debit	Credit
Jan-08	Delivery Truck		$ 61,440.00
	To cash			$ 61,440.00
	(To Record the purchase of Delivery truck for cash)
Mar-07	Truck repair Expense		$        230.00
	To cash			$        230.00
	(To record expenses for truck oil)
Dec-31	Depreciation Expense		$ 15,360.00				Value	61440
	To Accumulated Depreciation			$ 15,360.00			Life	8 years
	(To Record depreciation on delivery truck)						Depreciation	15360	(61440/8*2)
Year 2 :
Date	Accounts Title and Explaination	Ref.	Debit	Credit
Jan-09	Delivery Truck		$ 70,560.00
	To cash			$ 70,560.00
	(To Record the purchase of Delivery truck for cash)
Feb-28	Truck repair Expense		$        260.00
	To cash			$        260.00
	(To record expenses for truck oil)
Apr-30	Depreciation Expense		$    2,560.00		7680*4/12
	To Accumulated Depreciation			$    2,560.00
	(To Record depreciation on delivery truck)
Apr-30	Cash		$ 40,440.00
	Accumulated depreciation		$ 17,920.00
	Loss on sale		$    3,080.00
	To Delivery truck			$ 61,440.00
	(To record sale of truck )
Dec-31	Depreciation Expense		$ 20,160.00			Value	70560
	To Accumulated Depreciation			$ 20,160.00		Life	7 years
	(To Record depreciation on delivery truck)					Depreciation	20160
Year 3 :
Date	Accounts Title and Explaination	Ref.	Debit	Credit
Sep-01	Delivery Truck		$ 85,000.00
	To cash			$ 85,000.00
	(To Record the purchase of Delivery truck for cash)
Sep-04	Depreciation Expense		$ 10,080.00
	To Accumulated Depreciation			$ 10,080.00
	(To Record depreciation on delivery truck)
Sep-04	Cash		$ 42,900.00
	Accumulated depreciation		$ 30,240.00
	To Gain on sale			$    2,580.00
	To Delivery truck			$ 70,560.00
	(To record sale of truck )
						Value	85000
Dec-31	Depreciation Expense		$    5,667.00			Life	10
	To Accumulated Depreciation			$    5,667.00		Depreciation annually	17000
	(To Record depreciation on delivery truck)					Dep for 4 months	5666.666667