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.

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 $26,960, paying cash. Nov. 2. Paid garage $600 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 $5,250 for the truck. 2015 Jan. 6. Purchased a new truck for $50,150, paying cash. Apr. 1. Sold the used truck for $14,400. (Record depreciation to date in 2015 for the truck.) June 11. Paid garage $465 for miscellaneous repairs to the truck. Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $8,850 and an estimated life of five years. 2016 July 1. Purchased a new truck for $55,520, paying cash. Oct. 2. Sold the truck purchased January 6, 2015, for $17,473. (Record depreciation to date for 2016 for the truck.) Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $12,565 and an estimated useful life of eight years.

Explanation / Answer

Journal entries are shown as under:

Date Particulars L.F Amount ($) Amount ($) 2014 Jan-04 Truck 26,960    Cash 26,960 (For truck purchased) Nov-02 Auto repair expense 600    Cash 600 (For repairs done ) Dec-31 Depreciation 13480    Accumulated dep-Truck 13480 (For depreciation on truck recorded) 100/4 = 25%*2= 50% 2015 Jan-06 Truck 50,150    Cash 50,150 (For truck purchased) Apr-01 Depreciation 1,685    Accumulated dep-Truck 1,685 (For depreciation on truck recorded) 100/4 = 25%*2= 50% 13480*50%*3/12 Apr-01 Cash 14,400 Accumulated dep-Truck 15,165    Gain on sale of truck 2,605    Truck 26,960 (For truck purchased in Jan 2014 sold) Jun-11 Auto repair expense 465    Cash 465 (For repairs done ) Dec-31 Depreciation 20,060    Accumulated dep-Truck 20,060 (For depreciation on truck recorded) 100/5 = 20%*2= 40% 2016 Jul-01 Truck 55,520    Cash 55,520 (For truck purchased) Oct-02 Depreciation 9,027    Accumulated dep-Truck 9,027 (For depreciation on truck recorded) 100/5 = 20%*2= 40% 30,090*40%*9/12 Cash 17,473 Accumulated dep-Truck 29,087 Loss on sale of truck 3,590    Truck 50,150 (For truck purchased in Jan 2015 sold) Dec-31 Depreciation 6,940    Accumulated dep-Truck 6,940 (For depreciation on truck recorded) 100/8 = 12.5%*2= 25% 55520*25%*6/12

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