Instructions: The following transactions, adjusting entries, and closing entries
ID: 2480444 • Letter: I
Question
Instructions: 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.
2014
Jan. 4. Purchased a used delivery truck for $28,000, paying cash.
Nov. 2. Paid garage $635 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 $4,640 for the truck.
2015
Jan. 6. Purchased a new truck for $49,400, paying cash.
Apr. 1. Sold the used truck for $15,180. (Record depreciation to date in 2015 for the truck.)
June 11. Paid garage $470 for miscellaneous repairs to the truck.
Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $9,470 and an estimated life of five years.
2016
July 1. Purchased a new truck for $55,400, paying cash.
Oct. 2. Sold the truck purchased January 6, 2015, for $17,498. (Record depreciation to date for 2016 for the truck.)
Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $12,955 and an estimated useful life of eight years.
Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles. Be sure to include the YEAR in the date for the FIRST transaction on each page.
CHART OF ACCOUNTS Legacy Furniture Co. General Ledger
ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable
114 Interest Receivable
115 Notes Receivable
116 Merchandise Inventory
117 Supplies
119 Prepaid Insurance
120 Land
123 Delivery Truck
124 Accumulated Depreciation-Delivery Truck
125 Equipment
126 Accumulated Depreciation-Equipment
130 Mineral Rights
131 Accumulated Depletion
132 Goodwill
133 Patents
LIABILITIES
210 Accounts Payable
211 Salaries Payable
213 Sales Tax Payable
214 Interest Payable
215 Notes Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
313 Income Summary
REVENUE
410 Sales
610 Interest Revenue
620 Gain on Sale of Delivery Truck
621 Gain on Sale of Equipment
EXPENSES
510 Cost of Merchandise Sold
520 Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Delivery Truck
523 Delivery Expense
525 Truck Repair Expense
529 Selling Expenses
531 Rent Expense
532 Depreciation Expense-Equipment
533 Depletion Expense
534 Amortization Expense-Patents
535 Insurance Expense
536 Supplies Expense
539 Miscellaneous Expense
710 Interest Expense
720 Loss on Sale of Delivery Truck
721 Loss on Sale of Equipment
Explanation / Answer
Legacy Furniture Co. JOURNAL Date Account Tiltles and Explanation Debit ($) Credit ($) Jan 4, 2014 123 Delivery Truck a/c …………..Dr 28,000 To 110 Cash a/c 28,000 Nov 2 ,2014 525 Truck Repair Expense a/c …Dr 635 To 110 Cash a/c 635 Dec 31, 2014 522 Depreciation Expense-Delivery Truck a/c ..Dr 11,680 To 124 Accumulated Depreciation-Delivery Truck a/c 11,680 ((28000-4640)/4)*2 Jan 6, 2015 123 Delivery Truck a/c …………..Dr 49,400 To 110 Cash a/c 49,400 Apr 1, 2015 110 Cash a/c ………………………..Dr 15,180 124 Accumulated Depreciation-Delivery Truck a/c ……….Dr 11,680 522 Depreciation Expense-Delivery Truck a/c ..Dr 2,920 (11680*3/12) To 123 Delivery Truck a/c 28,000 To 620 Gain on Sale of Delivery Truck a/c 1,780 Jun 11 , 2015 525 Truck Repair Expense a/c …Dr 470 To 110 Cash a/c 470 Dec 31, 2015 522 Depreciation Expense-Delivery Truck a/c ..Dr 15,972 To 124 Accumulated Depreciation-Delivery Truck a/c 15,972 ((49,400-9470)/5)*2 Oct 2, 2016 123 Delivery Truck a/c …………..Dr 55,400 To 110 Cash a/c 55,400 110 Cash a/c ………………………..Dr 17,498 124 Accumulated Depreciation-Delivery Truck a/c ……….Dr 15,972 522 Depreciation Expense-Delivery Truck a/c ..Dr 11,979 (11680*9/12) 3,951 720 Loss on Sale of Delivery Truck a/c …Dr To 123 Delivery Truck a/c 49,400 Dec 31, 2016 522 Depreciation Expense-Delivery Truck a/c ..Dr 10,611 To 124 Accumulated Depreciation-Delivery Truck a/c 10,611 ((55,400-12,955)/8)*2