Question

Transactions for Fixed Assets, Including Sale The following transactions and adjusting entries were completed by Legacy Furniture Co. during a three-year period. All are related to the use of delivery equipment. The double-dedining-balance method of depreciation is used. Year 1 Jan. 4 Purchased a used delivery truck for $15,360, paying cash Nov. 2 Paid garage $180 for miscellaneous repairs to the truck Dec. 31 Recorded depreciation on the truck for the year. The estimated useful life of the truck is of $3,200 for the truck. Year 2 Jan. 6 Purchased a new truck for $9,000, paying cash. Apr. 1 Sold the used truck purchased on Jan. 4 of Year 1 for $6,270. (Record depreciation to date in Year 2 for the truck.) June 11 Paid garage $380 for miscellaneous repairs to the truck. Dec. 31 Record depreciation for the new truck. It has an estimated residual value of $1,600 and an estimated life of 5 years. Year 3 July 1 Purchased a new truck for $80,000, paying cash. Oct. 2 Sold the truck purchased January 6, Year 2, for $3,480. (Record depreciation to date for Year for the truck.) Dec. 31 Recorded depreciation on the remaining truck purchased on July 1. It has an estimated residual value of $14,400 and an estimated useful life of eight years. 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. Round your final answers to the nearest cent. Year 1 Jan. 4

Answer 1

ANSWER

YEAR 1 :

4-JAN  

Delivery Truck   $15360

Cash                      $15360

2-Nov   

Truck repair expenses   $180

Cash                      $180

31-Dec

Depreciatioan Expense-Delivery Truck   $7680   

Accumulated Depreciation-Delivery Truck                            $7680

(DDB arte 1/4*200%=50%)                          

(15360*50%)

                     

Year 2                                   

6-Jan

    Delivery Truck   $9,000  

Cash                      $9,000

1-Apr    

Depreciatioan Expense-Delivery Truck   $960

Accumulated Depreciation-Delivery Truck                            $960

(15360-7680)*50%*3/12                              

1-Apr    

Cash                                                      $6270   

Accumulated Depreciation-Delivery TrucK $8640              

lOSS on sale of Delivery Truck                           $450

Delivery Truck                                                                                  15360

11-Jun  

Truck repair expenses   $380      

Cash                      $380

31-Dec

Depreciatioan Expense-Delivery Truck   $3600   

Accumulated Depreciation-Delivery Truck                            $3600

(DDB arte 1/5*200%=40%)                          

(9000*40%)

                      

Year 3

                                   

1-Jul

       Delivery Truck   $80,000

Cash                      $80,000

2-Oct    

Depreciation Expense-Delivery Truck     $1620

Accumulated Depreciation-Delivery Truck                            $1620

(9000-3600)*40%*9/12                 

2-Oct    

Cash      $3480   

Accumulated Depreciation-Delivery TrucK $5220              

Loss on sale of Delivery Truck                     $300

Delivery Truck                                                                            9000

31-Dec

                                 

Depreciatioan Expense-Delivery Truck   $10000

Accumulated Depreciation-Delivery Truck                            $10000

(DDB rate 1/8*200%=25%)                          

(80000*25%)*6/12