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. The double-declining-balance method of depreciation is used.

Year 1
Jan. 8	Purchased a used delivery truck for $24,000, paying cash.
Mar. 7	Paid garage $900 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 four years, with a residual value of $4,000 for the truck.
Year 2
Jan. 9	Purchased a new truck for $50,000, paying cash.
Feb. 28	Paid garage $250 to tune the engine and make other minor repairs on the used truck.
Apr. 30	Sold the used truck for $9,500. (Record depreciation to date in Year 2 for the truck.)
Dec. 31	Record depreciation for the new truck. It has an estimated residual value of $12,000 and an estimated life of eight years.
Year 3
Sept. 1	Purchased a new truck for $58,500, paying cash.
Sept. 4	Sold the truck purchased January 9, Year 2, for $36,000. (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 $16,000 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.

Answer 1

Prepare the following journal entries:

Date	Account Title and Explanation	Debit	Credit
Jan. 8	Equipment - Delivery truck (1)	$24,000
	Cash		$24,000
	To record purchase of delivery truck 1
Mar. 7	Repairs and maintenance expenses	$900
	Cash		$900
	To record maintenance expenses paid
Dec. 31	Depreciation expense (24,000 × ((1 ÷ 4) × 2))	$12,000
	Accumulated depreciation - Delivery truck (1)		$12,000
	To record depreciation expense for the year
Jan. 9	Equipment - Delivery truck (2)	$50,000
	Cash		$50,000
	To record purchase of delivery truck 2
Feb. 28	Repairs and maintenance expenses	$250
	Cash		$250
	To record maintenance expenses paid
Apr. 30	Depreciation expense ((24,000 ? 12,000 × (1 ÷ 4) × 2)) × (4 ÷ 12)	$2,000
	Accumulated depreciation - Delivery truck (1)		$2,000
	To record depreciation expense for part of the year.
Apr. 30	Cash	$9,500
	Accumulated depreciation - Delivery truck (1)	$14,000
	Loss on sale of equipment	$500
	Equipment - Delivery truck (1)		$24,000
	To record sale of equipment
Dec. 31	Depreciation expense (50,000 × ((1 ÷ 8) × 2))	$12,500
	Accumulated depreciation - Delivery truck (2)		$12,500
	To record depreciation expense
Sept. 1	Equipment - Delivery truck (3)	$58,500
	Cash		$58,500
	To record purchase of delivery truck 3
Sept. 4	Depreciation expense ((50,000 ? 12,500 × (1 ÷ 8) × 2)) × (8 ÷ 12)	$6,250
	Accumulated depreciation - Delivery truck (2)		$6,250
	To record depreciation expense for part of the year.
Sept. 4	Cash	$36,000
	Accumulated depreciation - Delivery truck (2)	$18,750
	Gain on sale of equipment		$4,750
	Equipment - Delivery truck (2)		$50,000
	To record sale of equipment
Dec. 31	Depreciation expense (58,500 × ((1 ÷ 10) × 2)) × (4 ÷ 12)	$3,900
	Accumulated depreciation - Delivery truck (3)		$3,900
	To record depreciation expense