The following transactions, adjusting entries, and closing entries were complete
ID: 2478729 • Letter: T
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. 2014 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. 2015 Jan. 6. Purchased a new truck for $48,000, paying cash. Apr. 1. Sold the used truck for $15,000. (Record depreciation to date in 2015 for the truck.) June 11. Paid garage $450 for miscellaneous repairs to the truck. Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $9,000 and an estimated life of five years. 2016 July 1. Purchased a new truck for $54,000, paying cash. Oct. 2. Sold the truck purchased January 6, 2015, for $16,750. (Record depreciation to date for 2016 for the truck.) Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $12,000 and an estimated useful life of eight years. Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles. Be sure to include the YEAR in the date for the FIRST transaction on each page.
Explanation / Answer
Details Used Truck New Truck 1 New Truck 2 Cost Of truck 28,000 48,000 54,000 Residual Value 5,000 9,000 12,000 Useful life 4 5 8 SL depreciation rate 25% 20% 12.50% DD balance depreciation rate 50% 40% 25% Assuming Mid month convention for DD balance depreciation Depreciation 2014 (11.5 months) 13,417 Depreciation used truck for 3 months in 2015 on the book value= 1,798 Depreciation 2015. new truck (11.5 months) 18,400 Depreciation new truck 1 tll Oct 2 2016. on book value 8,921 Depreciation new truck 2. 6,750 Date Account Title Dr $ Cr $ Jan 4. 2014. Truck 28,000 Cash 28,000 Nov 2.2014. Repairing Expense 675 Cash 675 Dec 31.2014. Depreciation Expense-Trucks 13,417 Accumulated Depreciation -Trucks 13,417 Jan 6.2015. Truck 48,000 Cash 48,000 Apr 1.2015 Depreciation Expense-Trucks 1,798 Accumulated Depreciation -Trucks 1,798 ( recording 90 days depreciation on used truck) Truck (used ) 24,000 Accumulated Depreciation -Trucks 15,215 Cash 15,000 Gain on Sale of Assets 6,215 June 11.2015. Repairing Expense 450 Cash 450 Dec 31.2015 Depreciation Expense-Trucks 18,400 Accumulated Depreciation -Trucks 18,400 Jul 1.2016. Truck 54,000 Cash 54,000 Oct 2.2016 Depreciation Expense-Trucks 8,921 Accumulated Depreciation -Trucks 8,921 ( recording 270 days depreciation on used truck) Truck (used ) 48,000 Accumulated Depreciation -Trucks 27,321 Cash 16,750 Loss on Sale of Assets 3,929 Dec 31.2016 Depreciation Expense-Trucks 6,750 Accumulated Depreciation -Trucks 6,750
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