The following transactions, adjusting entries, and closing entries were complete
ID: 2604018 • Letter: T
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 $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
Answer:
Date
Particulars
Debit $
Credit $
2014
4-Jan
Truck
26,960
Cash
26,960
(To records the truck purchased)
2-Nov
Auto repair expense
600
Cash
600
(To record the repairs expanses )
31-Dec
Depreciation
13480
Accumulated dep-Truck
(100/4 = 25%*2= 50%)
13480
(To record the depreciation )
2015
6-Jan
Truck
50,150
Cash
50,150
(To records the truck purchased)
1-Apr
Depreciation
1,685
Accumulated deprecation-Truck
13480*50%*3/12
1,685
(To record the depreciation )
1-Apr
Cash
14,400
Accumulated depreciation-Truck
15,165
Gain on sale of truck
2,605
Truck
26,960
(To record the sale of the truck in the year 2015)
11-Jun
Auto repair expense
465
Cash
465
(To record the repairs expanses )
31-Dec
Depreciation
20,060
Accumulated dep-Truck
(100/5 = 20%*2= 40%)
20,060
(For depreciation on truck recorded)
2016
1-Jul
Truck
55,520
Cash
55,520
(To record the truck purchased)
2-Oct
Depreciation
9,027
Accumulated dep-Truck
100/5 = 20%*2= 40%
30,090*40%*9/12
9,027
(For depreciation on truck recorded)
Cash
17,473
Accumulated dep-Truck
29,087
Loss on sale of truck
3,590
Truck
50,150
(to record the sale of truck)
31-Dec
Depreciation
6,940
Accumulated dep-Truck
100/8 = 12.5%*2= 25%
55520*25%*6/12
6,940
(To record the depreciation on truck )
Date
Particulars
Debit $
Credit $
2014
4-Jan
Truck
26,960
Cash
26,960
(To records the truck purchased)
2-Nov
Auto repair expense
600
Cash
600
(To record the repairs expanses )
31-Dec
Depreciation
13480
Accumulated dep-Truck
(100/4 = 25%*2= 50%)
13480
(To record the depreciation )
2015
6-Jan
Truck
50,150
Cash
50,150
(To records the truck purchased)
1-Apr
Depreciation
1,685
Accumulated deprecation-Truck
13480*50%*3/12
1,685
(To record the depreciation )
1-Apr
Cash
14,400
Accumulated depreciation-Truck
15,165
Gain on sale of truck
2,605
Truck
26,960
(To record the sale of the truck in the year 2015)
11-Jun
Auto repair expense
465
Cash
465
(To record the repairs expanses )
31-Dec
Depreciation
20,060
Accumulated dep-Truck
(100/5 = 20%*2= 40%)
20,060
(For depreciation on truck recorded)
2016
1-Jul
Truck
55,520
Cash
55,520
(To record the truck purchased)
2-Oct
Depreciation
9,027
Accumulated dep-Truck
100/5 = 20%*2= 40%
30,090*40%*9/12
9,027
(For depreciation on truck recorded)
Cash
17,473
Accumulated dep-Truck
29,087
Loss on sale of truck
3,590
Truck
50,150
(to record the sale of truck)
31-Dec
Depreciation
6,940
Accumulated dep-Truck
100/8 = 12.5%*2= 25%
55520*25%*6/12
6,940
(To record the depreciation on truck )
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