Question

$86, JUL GENERAL LEDGER Obj. 1, 2, 3 PR 9-5A 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-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 5675 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

Answer 1

ANSWER

As per the given question,

Credit Year 1 Date Jan 4 Debit $28,000.00 Particulars Vehicle - Truck No 1 Cash (Being Used Truck purchased) $28,000.00 1 Nov 2 $675.00 Repairs and Maintainance Cash (Being payment made for repair of truck) $675.00 1 Dec 31 $13,923.00 Depreciation Accumulated Depreciation - Truck (Being Depreciation provided) $13,923.00 2 Jan 6 $48,000.00 Vehicle - Truck No 2 Cash (Being Truck purchased) $48,000.00 2 April 1 $1,755.00 Depreciation Accumulated Depreciation - Truck (Being Depreciation provided) $1,755.00

2 April 1 $15,678.00 $15,000.00 Accumulated Depreciation - Truck Cash Gain on sale of asset Vehicle - Truck No 1 (Being profit on sale of asset truck no 1) $2,678.00 $28,000.00 2 Jun 11 $450.00 Repairs and Maintainance Cash (Being payment made for repair of truck) $450.00 2 Dec 31 $18,937.00 Depreciation Accumulated Depreciation - Truck (Being Depreciation provided) $18,937.00 3 July 1 $54,000.00 Vehicle - Truck No 3 Cash (Being Truck purchased) $54,000.00 3 Oct 2 $8,759.00 Depreciation Accumulated Depreciation - Truck (Being Depreciation provided) $8,759.00

Oct 2 Accumulated Depreciation - Truck Cash Loss on sale of asset Vehicle - Truck No 2 (Being loss on sale of asset truck no 2) $27,696.00 $16,750.00 $3,554.00 $48,000.00 Dec 31 $6,805.00 Depreciation Accumulated Depreciation - Truck (Being Depreciation provided) $6,805.00 Working Double Declining Balance Method (DDBM) = (2/Usefule Life* Book Value)/365* No of days used Assets - Truck No 1 Usefule life : 4 years Particulars Purchase Less : Depreciation for the year [(2/4 x $28000)/365 x 363] Written Down Book Value Less: Depreciation up date of sale [(2/4 x $14077)/365 x 91] Written Down Book Value on the date of sale Date No of days 4-Jan-00 31-Dec-00 363.00 Amount $28,000.00 ($13,923.00) $14,077.00 ($1,755.00) $12,322.00 1-Apr-01 91.00

Sale Value Less: Written Down Book Value on the date of sale Gain on sale of asset $15,000.00 ($12,322.00) $2,678.00 (b) Assets - Truck No 2 Usefule life: 5 years Date No of days 6-Jan-01 31-Dec-011 360.00 Purchase Less: Depreciation for the year [(2/5 x $48000)/365 x 360] Written Down Book Value Less: Depreciation up date of sale [(2/5 x $29063)/365 x 275] Written Down Book Value on the date of sale Amount $48,000.00 ($18,937.00) $29,063.00 ($8,759.00) $20,304.00 2-Oct-02 275.00 Sale Value Less: Written Down Book Value on the date of sale Loss on sale of asset Assets - Truck No 3 Usefule life : 8 years $16,750.00 ($20,304.00) ($3,554.00) (c) Purchase Less: Depreciation for the year [(2/8 x $54000)/365 x 184] Written Down Book Value Date No of days 1-Jul-02 31-Dec-02 184.00 Amount $54,000.00 ($6,805.00) $47,195.00

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