Question

Instructions Chart of Accounts Journal Instructions 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 Jan 4 Now 2 Dec 31 Purchased a used delivery truck for $28,000, paying cash Paid garage $625 for miscellaneous repairs to the truck Recorded depreciation on the truck for the year The estimated us a residual of $2,000 for the truck e of the truck is four years, with Year 2 Jan Apr 1 June 11 Purchased a new truck for $60,000, paying cash Sold the used truck for $14.000 (Record depreciation to date in Year 2 for the truck) Paid garage $200 for miscellaneous repairs to the truck Record depreciation for the new truck it has an estimated residual value of $7.000 and an estimated Dec 31 We of the years Year 3 July 1 Oct 2 EET Purchased a new truck for $65.000, parying cash Sold the truck purchased January 5, Year 2 for $10 520 (Record depreciation to date for Year for the truck) Recorded depreciation on the remaining truck. It has an estimated residual value of $5,000 and an estimated selle teght years Dec 31 pranino Novo

the following transactions and adjusting entries were completed by legacy furniture co. during a tree year period. all are related to the use of delivery equipment. the double-declining-balance method of depreciation is used.

Answer 1

Legacy furniture company - Journal entries
Date	Account Title	Debit ($)	Credit ($)
Year 1
Jan. 4	Truck	26000
	Cash		26000
Nov. 2	Truck repair and main.exp.	825
	Cash		825
Dec.31	depreciation exp.	13000		( SLM rate = 1/ 4 = 25 % , DDB rate = 25 * 2 = 50 % )
	Accumulated dep.		13000	( dep.exp. = 26000 * 50 % = 13000 ; Salvage value is ignored )
Year 2
Jan. 6	Truck	60000
	Cash		60000
Apr-01	depreciation exp.	1625		( book value = 26000 - 13000 = 13000
	Accumulated dep.		1625	Dep. Exp. = 13000 * 50 % * 3/12 =1625 )
Apr-01	Cash	14000
	Accumulated dep.( 13000 + 1625 )	14625
	Gain on sale of truck		2625
	Truck		26000
Jun-11	Truck repair and main.exp.	280
	Cash		280
Dec.31	depreciation exp.	24000		( SLM rate = 1/ 5 = 20 % , DDB rate = 20 * 2 = 40 % )
	Accumulated dep.		24000	( dep.exp. = 60000 * 40 % = 24000 ; Salvage value is ignored )
Year 3
Jul-01	Truck	65000
	Cash		65000
Oct.2	depreciation exp.	10800		( book value = 60000 - 24000 = 36000
	Accumulated dep.		10800	Dep. Exp. = 36000 * 40 % * 9/12 = 10800 )
Oct.2	Cash	19620
	Accumulated dep.( 24000 + 10800 )	34800
	Loss on sale of truck	5580
	Truck		60000
Dec.31	depreciation exp.	8125		( SLM rate = 1/ 8 = 12.5 % , DDB rate = 12.5 * 2 = 25 % )
	Accumulated dep.		8125	( dep.exp. = 65000 * 25 % *6/12= 8125 ; Salvage value is ignored )