Question

Transactions for Fixed Assets, Including Sale

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.

Year 1
Jan. 8.	Purchased a used delivery truck for $61,440, paying cash.
Mar. 7.	Paid garage $220 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 8 years, with a residual value of $12,900 for the truck.
Year 2
Jan. 9.	Purchased a new truck for $70,560, paying cash.
Feb. 28.	Paid garage $220 to tune the engine and make other minor repairs on the used truck.
Apr. 30.	Sold the used truck for $40,440. (Record depreciation to date in Year 2 for the truck.)
Dec. 31.	Record depreciation for the new truck. It has an estimated trade-in value of $12,700 and an estimated life of 7 years.
Year 3
Sept. 1.	Purchased a new truck for $81,000, paying cash.
Sept. 4.	Sold the truck purchased January 9, Year 2, for $42,900. (Record depreciation to date in Year 3 for the truck.)
Dec. 31.	Recorded depreciation on the remaining truck. It has an estimated residual value of $14,600 and an estimated useful life of 10 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. 8	Delivery Truck
	Cash
Mar. 7	Truck Repair Expense
	Cash
Dec. 31	Depreciation Expense-Delivery Truck
	Accumulated Depreciation-Delivery Truck
Year 2 Jan. 9	Delivery Truck
	Cash
Feb. 28	Truck Repair Expense
	Cash
Apr. 30-Deprec.	Depreciation Expense-Delivery Truck
	Accumulated Depreciation-Delivery Truck
Apr. 30-Sale	Accumulated Depreciation-Delivery Truck
	Cash
	Loss on Sale of Delivery Truck
	Delivery Truck
Dec. 31	Depreciation Expense-Delivery Truck
	Accumulated Depreciation-Delivery Truck
Year 3 Sept. 1	Delivery Truck
	Cash
Sept. 4-Deprec.	Depreciation Expense-Delivery Truck
	Accumulated Depreciation-Delivery Truck
Sept. 4-Sale	Cash
	Accumulated Depreciation-Delivery Truck
	Delivery Truck
	Gain on Sale of Delivery Truck
Dec. 31	Depreciation Expense-Delivery Truck
	Accumulated Depreciation-Delivery Truck

Answer 1

Robinson furniture company - Journal entries
Date	Account Title	Debit ($)	Credit ($)
Jan. 8 , 14	Truck	61440
	Cash		61440
Mar-07	Truck repair exp.	220
	Cash		220
Dec.31, 14	depreciation exp.	15360		( SLM rate = 1/ 8 = 12.5 % , DDB rate = 12.5 * 2 = 25 % )
	Accumulated dep.		15360	( dep.exp. = 61440 * 25 % = 15360 ; Salvage value is ignored )
Jan. 9, 2015	Truck	70560
	Cash		70560
Feb. 28	Truck repair exp.	220
	Cash		220
April 30, 15	depreciation exp.	3840		( book value = 61440 - 15360 = 46080
	Accumulated dep.		3840	Dep. Exp. = 46080 * 25 % * 4/12 = 3840 )
April 30, 15	Cash	40440
	Accumulated dep.( 15360 + 3840 )	19200
	Loss on sale of truck	1800
	Truck		61440
Dec.31, 15	depreciation exp.	20160		( SLM rate = 1/ 7 = 14.29 % , DDB rate = 14.29 * 2 = 28.57 % )
	Accumulated dep.		20160	( dep.exp. = 70560 * 28.57 % = 20160 ; Salvage value is ignored )
Sept. 1, 2016	Truck	81000
	Cash		81000
Sept. 4, 2016	depreciation exp.	9600		( book value = 70560 - 20160 = 50400
	Accumulated dep.		9600	Dep. Exp. = 50400 * 28.57 % * 8/12 = 9600 )
Sept. 4, 2016	Cash	42900
	Accumulated dep.( 20160 + 9600 )	29760
	Gain on sale of truck		2100
	Truck		70560
Dec.31, 16	depreciation exp.	5400		( SLM rate = 1/ 10 = 10 % , DDB rate = 10 * 2 = 20 % )
	Accumulated dep.		5400	( dep.exp. = 81000 * 20 % * 4/12 = 5400 ; Salvage value is ignored )