Instructions (This is all one question, answer all of the following.) The follow
ID: 2462147 • Letter: I
Question
Instructions (This is all one question, answer all of the following.)
The following transactions, adjusting entries, and closing 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.
Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles. Be sure to include the YEAR in the date for the FIRST transaction on each page.
2014 Jan. 4. Purchased a used delivery truck for $28,000, paying cash. Nov. 2. Paid garage $675 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 $5,000 for the truck. 2015 Jan. 6. Purchased a new truck for $48,000, paying cash. Apr. 1. Sold the used truck for $15,000. (Record depreciation to date in 2015 for the truck.) June 11. Paid garage $450 for miscellaneous repairs to the truck. Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $9,000 and an estimated life of five years. 2016 July 1. Purchased a new truck for $54,000, paying cash. Oct. 2. Sold the truck purchased January 6, 2015, for $16,750. (Record depreciation to date for 2016 for the truck.) Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $12,000 and an estimated useful life of eight years.Explanation / Answer
2014
Delivery truck
$28,000
To Cash
$28,000
Nov 2
Truck repair expense
$675
To Cash
$675
Adjusting entry
Dec 31
Depreciation expense – Delivery truck
$5,750
To Accumulated depreciation
(28,000-5,000)/4
$5,750
2015
Jan 6
Delivery truck
$48,000
To Cash
$48,000
April 1
Depreciation expense- delivery truck
$1,437.50
To Accumulated depreciation
(5750*3/12)
$1,437.50
Cash
$15,000
Accumulated depreciation
7,187.50
Loss on sale of Delivery truck
5,812.50
To Delivery Truck
$28,000
June 11
Truck repair expense
$450
To Cash
$450
Dec 31 Adjusting
Depreciation expense
7,800
To Accumulated deprecation
(48,000-9,000)/5
7,800
2016
July 1
Delivery truck
$54,000
To Cash
$54,000
Oct 2
Depreciation expense
$5,850
To Accumulated depreciation
(7800*9/12)
$5,850
Cash
$16,750
Accumulated depreciation
13,650
Loss on sale of delivery truck
17,600
To Delivery truck
$48,000
Adjusting entry
Depreciation expense
$2,625
To Accumulated depreciation
(54,000-12,000)/8 *1/2
$2,625
2014
Delivery truck
$28,000
To Cash
$28,000
Nov 2
Truck repair expense
$675
To Cash
$675
Adjusting entry
Dec 31
Depreciation expense – Delivery truck
$5,750
To Accumulated depreciation
(28,000-5,000)/4
$5,750