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 $29,200, paying cash. Nov. 2. Paid garage $650 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 $4,505 for the truck. Year 2 Jan. 6. Purchased a new truck for $49,900, paying cash. Apr. 1. Sold the used truck for $15,710. (Record depreciation to date in Year 2 for the truck.) June 11. Paid garage $495 for miscellaneous repairs to the truck. Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $8,790 and an estimated life of five years. Year 3 July 1. Purchased a new truck for $55,320, paying cash. Oct. 2. Sold the truck purchased January 6, Year 2, for $17,708. (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 $11,715 and an estimated useful life of eight years.

Answer 1

Date	Description	Debit	Credit
Year 1
Jan. 4	Delivery Truck	29,200
	Cash		29,200
Nov. 2	Truck Repair Expense	650
	Cash		650
Dec. 31	Depreciation Expense—Delivery Truck	14,600
	Accum. Depreciation—Delivery Truck		14,600
	Delivery truck depreciation.
	[$29,200 × (1/4 × 2)]
Year 2
Jan. 6	Delivery Truck	49,900
	Cash		49,900
Apr. 1	Depreciation Expense—Delivery Truck	1,825
	Accum. Depreciation—Delivery Truck		1,825
	Delivery truck depreciation.
	[($29,200 – $14,600) × (1/4 × 2) × 3/12]
1	Accum. Depreciation—Delivery Truck	16,425
	Cash	15,710
	Delivery Truck		29,200
	Gain on Sale of Delivery Truck		2,935
June 11	Truck Repair Expense	495
	Cash		495
Dec. 31	Depreciation Expense—Delivery Truck	19,960
	Accum. Depreciation—Delivery Truck		19,960
	Delivery truck depreciation.
	[$46,800 × (1/5 × 2)]
Year 3
July 1	Delivery Truck	55,320
	Cash		55,320
Oct. 2	Depreciation Expense—Delivery Truck	8,982
	Accum. Depreciation—Delivery Truck		8,982
	Delivery truck depreciation.
	[($49,900 – $19,960) × (1/5 × 2) × 9/12]
	Cash	17,708
	Accum. Depreciation—Delivery Truck	28,942
	Loss on Sale of Delivery Truck	3,250
	Delivery Truck		49,900
Dec. 31	Depreciation Expense—Delivery Truck	6,915
	Accum. Depreciation—Delivery Truck		6,915
	Delivery truck depreciation.
	[$55,320 × (1/8 × 2) × 1/2]