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 purchased on Jan. 4 of Year 1 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 Recorded 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 purchased on July 1. 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.

Answer 1

Date	General Journal	Debit	Credit
Year 1
4-Jan	Delivery truck	26,960
	Cash		26,960
	Truck Repair Expense	600
	Cash		600
	Depreciation Expense - Delivery Truck	13,480
	Accumulated Depreciation - Delivery Truck		13,480
	26960*1/4*2
Year 2
6-Jan	Delivery truck	50,150
	Cash		50,150
1-Apr	Depreciation Expense - Delivery Truck	1,685
	Accum Depreciation - Delivery Truck		1,685
	((26960-13480)*1/4*2*3/12)
1-Apr	Accum Depreciation - Delivery Truck	15,165
	Cash	14,400
	Delivery Truck		26,960
	Gain on sale of delivery truck		2,605
11-Jun	Truck Repair expense	465
	Cash		465
31-Dec	Depreciation Expense - Delivery Truck	20,060
	Accum Depreciation - Delivery Truck		20,060
	50150*2*1/5
Year 3
1-Jul	Delivery truck	55,520
	Cash		55,520
2-Oct	Depreciation Expense - Delivery Truck	9,027
	Accum Depreciation - Delivery Truck		9,027
	((50150-20060)*(1/5*2)*(9/12))
2-Oct	Cash	17,473
	Accum Depreciation - Delivery Truck 20060+9027	29,087
	Loss on sale of delivery truck	3,590
	Delivery Truck		50,150
31-Dec	Depreciation Expense - Delivery Truck	6,940
	Accum Depreciation - Delivery Truck		6,940
	(55520*(1/8*2)*1/2)