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 $15,360, paying cash.
Nov. 2	Paid garage $180 for miscellaneous repairs to the truck.
Dec. 31	Recorded depreciation on the truck for the year. The estimated useful life of the truck is 4 years, with a residual value of $3,200 for the truck.
Year 2
Jan. 6	Purchased a new truck for $9,000, paying cash.
Apr. 1	Sold the used truck purchased on Jan. 4 of Year 1 for $6,270. (Record depreciation to date in Year 2 for the truck.)
June 11	Paid garage $250 for miscellaneous repairs to the truck.
Dec. 31	Record depreciation for the new truck. It has an estimated residual value of $1,600 and an estimated life of 5 years.
Year 3
July 1	Purchased a new truck for $96,000, paying cash.
Oct. 2	Sold the truck purchased January 6, Year 2, for $3,480. (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 $17,300 and an estimated useful life of eight 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

Year	Date	Account	Debit	Credit
Year 1	4-Jan	Delivery Truck	$          15,360
		Cash		$          15,360
	2-Nov	Truck Repair Expense	$       180
		Cash		$       180
	31-Dec	Depreciation Expense-Delivery Truck	$            7,680
		Accumulated Depreciation-Delivery Truck		$            7,680
		($15,360) x (1/4 x 2)
Year 2	6-Jan	Delivery Truck	$            9,000
		Cash		$            9,000
	1-Apr	Depreciation Expense-Delivery Truck	$               960
		Accumulated Depreciation-Delivery Truck		$               960
		($15,360 - 7,680) x   [(1/4 x 2) x 3/12 months ]
	1-Apr	Cash	$            6,270
		Accumulated Depreciation-Delivery Truck ($7680 +960)	$            8,640
		Loss on Sale of Truck	$               450
		Delivery Truck		$          15,360
	11-Jun	Truck Repair Expense	$               250
		Cash		$               250
	31-Dec	Depreciation Expense-Delivery Truck	$            3,600
		Accumulated Depreciation-Delivery Truck		$            3,600
		($9000) x (1/5 x 2)
Year 3	1-Jul	Delivery Truck	$          96,000
		Cash		$          96,000
	2-Oct	Depreciation Expense-Delivery Truck	$            1,620
		Accumulated Depreciation-Delivery Truck		$            1,620
		($9000 - 3,600) X [ (1/5 X 2 ) * 9/12
	2-Oct	Cash	$            3,480
		Accumulated Depreciation-Delivery Truck ($3600 +1620)	$            5,220
		Loss on Sale of Truck	$               300
		Delivery Truck		$            9,000
	31-Dec	Depreciation Expense-Delivery Truck	$          12,000
		Accumulated Depreciation-Delivery Truck		$          12,000
		($96000) x [(1/8 x 2) * 6/12 ]

ear	Date	Account	Debit	Credit
Year 1	4-Jan	Delivery Truck	$          15,360
		Cash		$          15,360