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.

year 1
Jan. 4. Purchased a used delivery truck for $29,200, paying cash.
Nov. 2. Paid garage $650 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 $4,505 for the truck.

Year 2
Jan. 6. Purchased a new truck for $49,000, paying cash.
Apr. 1. Sold the used truck purchased on Jan. 4 of year 1 for $15,710. (Record depreciation to date in year 2 for the truck.)
June 11. Paid garage $495 for miscellaneous repairs to the truck.
Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $8,790 and an estimated life of five years.

year 3
July 1. Purchased a new truck for $55,320, paying cash.
Oct. 2. Sold the truck purchased January 6, Year 2, for $17,708. (Record depreciation to date for year 3 for the truck.)
Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $11,715 and an estimated useful life of eight years.

Instructions

Journalize the transactions and the adjusting entries. chart of accounts

ctions mart of Accounts CHART OF ACCOUNTS Legacy Furniture Co. General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 610 Interest Revenue 112 Accounts Receivable 114 Interest Receivable 620 Gain on Sale of Delivery Truck 621 Gain on Sale of Equipment 115 Notes Receivable

Answer 1

1. Journal Entries -

Legacy Furniture Co. Journal Entries Accounts Title Debit Credit Date Year 1 Jan 4 $ 29,200 Delivery Truck Cash (Being Delivery Truck Purchased) $ 29,200 Nov 2 650 Truck Repair Expense $ Cash (Being Truck Repair Expense paid) $ 650 Dec 31 Depreciation Expense - Delivery Truck $ 6,174 Accumulated Depreciation - Delivery Truck (Being Depreciation Expense incurred) $ 6,174 Year 2 Jan 6 $ 49,000 Delivery Truck Cash (Being Delivery Truck Purchased) $ 49,000 Apr 1 Cash Depreciation Expense - Delivery Truck Accumulated Depreciation - Delivery Truck Loss on sale of Delivery Truck Delivery Truck (Being Delivery Truck Sold) $ 15,710 $ 1,543 $ 6,174 S 5,773 $ 29,200 Jun 11 495 Truck Repair Expense Cash (Being Truck Repair Expense paid) 495 8,042 Dec 31 Depreciation Expense - Delivery Truck $ Accumulated Depreciation - Delivery Truck (Being Depreciation Expense incurred) $ 8,042 $ 55,320 Year 3 July 1 Delivery Truck Cash (Being Delivery Truck Purchased) $ 55,320 Oct 2 Cash Depreciation Expense - Delivery Truck Accumulated Depreciation - Delivery Truck Loss on sale of Delivery Truck Delivery Truck (Being Delivery Truck Sold) $ 17,708 $ 6,032 $ 8,042 $ 17,219 $ 49,000 2,725 Dec 31 Depreciation Expense - Delivery Truck $ Accumulated Depreciation - Delivery Truck (Being Depreciation Expense incurred) $ 2,725