Question

nstructions 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-declining balance method of depreciation is used. Year 1 Jan. 4 Purchased a used delivery truck for $28,000. paying cash Nov 2 Paid garage $675 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 $5,000 for the truck Year 2 Jan. 6 Apr 1 Purchased a new truck for $48,000. paying cash Sold the used truck purchased on Jan 4 of Year 1 for $15.000 Record depreciation to date in Year 2 for the truck.) Paid garage $450 for miscellaneous repairs to the truck Record depreciation for the new truck it has an estimated residual value of $9.000 and antimated e of five years June 11 Dec 31

Answer 1

Date      Accounts Title                                       Dr                                          cr

Year 1                                   

4-Jan    

Delivery Truck                                                    $28,000               

Cash

                                                                                                                           $28,000

2-Nov   

Truck repair expenses                                             $675            

Cash

                                                                                                                           $675

31-Dec

Depreciatioan Expense-Delivery Truck               $14,000    

Accumulated Depreciation-Delivery Truck                                            $14,000

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

(28000*50%)                     

Year 2

                                               

6-Jan

Delivery Truck                                                            $48,000       

Cash                                                                                                                  $48,000

1-Apr

Depreciatioan Expense-Delivery Truck                                      $1,750               

Accumulated Depreciation-Delivery Truck                                               $1,750

(28000-14000)*50%*3/12                            

1-Apr    

Cash                                                                                   $15,000   

Accumulated Depreciation-Delivery Truck                  $15,750          

Gain on sale of Delivery Truck                                                                         $2,750

Delivery Truck                                                                                                     28000

11-Jun

Truck repair expenses                                                       $450  

Cash                                                                                                                        $450

31-Dec

Depreciatioan Expense-Delivery Truck     $19,200            

Accumulated Depreciation-Delivery Truck                                                       $19,200

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

(48000*40%)     

Year 3   

                               

1-Jul

Delivery Truck $54,000   

Cash $54,000

2-Oct   

Depreciation Expense-Delivery Truck   8640      

Accumulated Depreciation-Delivery Truck $8,640

(48000-19200)*40%*9/12           

                 

2-Oct

Cash $16,750

Accumulated Depreciation-Delivery Truck            $35,950

Gain on sale of Delivery Truck $4,700

Delivery Truck 48000

31-Dec

                                 

Depreciatioan Expense-Delivery Truck   6750      

Accumulated Depreciation-Delivery Truck                            $6,750

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

(54000*25%)*6/12