The following transactions and adjusting entries were completed by Robinson Furn

Question

The following transactions and adjusting entries were completed by Robinson 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.

Required:

Journalize the transactions and the adjusting entries. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations.

Year 1 Jan. 8 Purchased a used delivery truck for $24,000, paying cash. Mar. 7 Paid garage $900 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck. Dec. 31 Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is four years, with a residual value of $4,000 for the truck. Year 2 Jan. 9 Purchased a new truck for $50,000, paying cash. Feb. 28 Paid garage $250 to tune the engine and make other minor repairs on the used truck. Apr. 30 Sold the used truck for $9,500. (Record depreciation to date in Year 2 for the truck.) Dec. 31 Record depreciation for the new truck. It has an estimated residual value of $12,000 and an estimated life of eight years. Year 3 Sept. 1 Purchased a new truck for $58,500, paying cash. Sept. 4 Sold the truck purchased January 9, Year 2, for $36,000. (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 $16,000 and an estimated useful life of 10 years.

Explanation / Answer

Prepare the following journal entries:

Date Account Title and Explanation Debit Credit Jan. 8 Equipment - Delivery truck (1) $24,000               Cash $24,000 To record purchase of delivery truck 1 Mar. 7 Repairs and maintenance expenses $900               Cash $900 To record maintenance expenses paid Dec. 31 Depreciation expense (24,000 × ((1 ÷ 4) × 2)) $12,000                      Accumulated depreciation - Delivery truck (1) $12,000 To record depreciation expense for the year Jan. 9 Equipment - Delivery truck (2) $50,000               Cash $50,000 To record purchase of delivery truck 2 Feb. 28 Repairs and maintenance expenses $250               Cash $250 To record maintenance expenses paid Apr. 30 Depreciation expense ((24,000 ? 12,000 × (1 ÷ 4) × 2)) × (4 ÷ 12) $2,000                      Accumulated depreciation - Delivery truck (1) $2,000 To record depreciation expense for part of the year. Apr. 30 Cash $9,500 Accumulated depreciation - Delivery truck (1) $14,000 Loss on sale of equipment $500                        Equipment - Delivery truck (1) $24,000 To record sale of equipment Dec. 31 Depreciation expense (50,000 × ((1 ÷ 8) × 2)) $12,500                      Accumulated depreciation - Delivery truck (2) $12,500 To record depreciation expense Sept. 1 Equipment - Delivery truck (3) $58,500               Cash $58,500 To record purchase of delivery truck 3 Sept. 4 Depreciation expense ((50,000 ? 12,500 × (1 ÷ 8) × 2)) × (8 ÷ 12) $6,250                      Accumulated depreciation - Delivery truck (2) $6,250 To record depreciation expense for part of the year. Sept. 4 Cash $36,000 Accumulated depreciation - Delivery truck (2) $18,750 Gain on sale of equipment $4,750                        Equipment - Delivery truck (2) $50,000 To record sale of equipment Dec. 31 Depreciation expense (58,500 × ((1 ÷ 10) × 2)) × (4 ÷ 12) $3,900                      Accumulated depreciation - Delivery truck (3) $3,900 To record depreciation expense

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