The following transactions, adjusting entries, and closing entries were complete

Question

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 $27,200, paying cash.

Nov. 2. Paid garage $630 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 $5,005 for the truck. 2015

Jan. 6. Purchased a new truck for $49,250, paying cash.

Apr. 1. Sold the used truck for $14,670. (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 $8,950 and an estimated life of five years. 2016

July 1. Purchased a new truck for $53,920, paying cash.

Oct. 2. Sold the truck purchased January 6, 2015, for $17,125. (Record depreciation to date for 2016 for the truck.)

Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $12,945 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.

Explanation / Answer

Journal Entry

Working

2014

Depreciation Expenses = (27200-5005)/4 = 5548.75

2015

Apr 1 Depreciation Expenses = 5548.75*3/12

Dec 31

Depreciation Expenses = (49250-8950)/5 = 8060

2016

Oct 1 Depreciation Expenses = 8060*9/12 = 6045

Dec 31

Depreciation Expenses = (53920-12945)/8 * 6/12 = 2560.94

Date Account Title & Explaination Debit Credit 2014 Jan. 4. Delivery Truck 27200 Cash 27200 Nov. 2. Miscellaneous Expense 630 Cash 630 Dec. 31 Depreciation Expenses 5548.75 Accumulated Depreciation 5548.75 2015 Jan. 6. Delivery Truck 49250 Cash 49250 Apr. 1 Depreciation Expenses 1387.1875 Accumulated Depreciation 1387.1875 Apr. 1 Accumulated Depreciation 6935.9375 Cash 14670 Loss on Sale of Truck 5594.0625 Delivery Truck 27200 June 11 Miscellaneous Expense 450 Cash 450 Dec. 31 Depreciation Expenses              8,060.00 Accumulated Depreciation                   8,060.00 2016 July 1 Delivery Truck 53920 Cash 53920 Oct. 2 Depreciation Expenses 6045 Accumulated Depreciation 6045 Oct. 2 Accumulated Depreciation            14,105.00 Cash 17125 Loss on Sale of Truck 18020 Delivery Truck 49250 Dec. 31 Depreciation Expenses              2,560.94 Accumulated Depreciation                   2,560.94

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