Transactions for Fixed Assets, Including SaleThe 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. 4Purchased a used delivery truck for $15,360, paying cash.Nov. 2Paid garage $170 for miscellaneous repairs to the truck.Dec. 31Recorded depreciation on the truck for the year. The estimated useful life of the truck is 4 years, with a residual value of $3,200 for the truck.Year 2 Jan. 6Purchased a new truck for $9,000, paying cash.Apr. 1Sold the used truck purchased on January 4 of Year 1 for $6,270. (Record depreciation to date in Year 2 for the truck.)June 11Paid garage $430 for miscellaneous repairs to the truck.Dec. 31Record depreciation for the new truck. It has an estimated residual value of $1,600 and an estimated life of 5 years.Year 3 July 1Purchased a new truck for $90,000, paying cash.Oct. 2Sold the truck purchased January 6, Year 2, for $3,480. (Record depreciation to date for Year 3 for the truck.)Dec. 31Recorded depreciation on the remaining truck purchased on July 1. It has an estimated residual value of $16,200 and an estimated useful life of eight 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 1Jan. 4 Delivery TruckDelivery Truck CashCashNov. 2 Truck Repair ExpenseTruck Repair Expense CashCashDec. 31 Depreciation Expense-Delivery TruckDepreciation Expense-Delivery Truck Accumulated Depreciation-Delivery TruckAccumulated Depreciation-Delivery TruckYear 2Jan. 6 Delivery TruckDelivery Truck CashCashApr. 1-Deprec. Depreciation Expense-Delivery TruckDepreciation Expense-Delivery Truck Accumulated Depreciation-Delivery TruckAccumulated Depreciation-Delivery TruckApr. 1-Sale Accumulated Depreciation-Delivery TruckAccumulated Depreciation-Delivery Truck CashCash Loss on Sale of Delivery TruckLoss on Sale of Delivery Truck Delivery TruckDelivery TruckJune 11 Truck Repair ExpenseTruck Repair Expense CashCashDec. 31 Depreciation Expense-Delivery TruckDepreciation Expense-Delivery Truck Accumulated Depreciation-Delivery TruckAccumulated Depreciation-Delivery TruckYear 3July 1 Delivery TruckDelivery Truck CashCashOct. 2-Deprec. Depreciation Expense-Delivery TruckDepreciation Expense-Delivery Truck Accumulated Depreciation-Delivery TruckAccumulated Depreciation-Delivery TruckOct. 2-Sale CashCash Accumulated Depreciation-Delivery TruckAccumulated Depreciation-Delivery Truck Loss on Sale of Delivery TruckLoss on Sale of Delivery Truck Delivery TruckDelivery TruckDec. 31 Depreciation Expense-Delivery TruckDepreciation Expense-Delivery Truck Accumulated Depreciation-Delivery TruckAccumulated Depreciation-Delivery Truck

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Description: Transactions for Fixed Assets, Including SaleThe 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

Journal entries refer to the process of chronologically collecting and recording all the transactions done by a company into its books.Preparing the journal entries as follows: Date Account Title Debit ($) Credit ($) Jan 4 Delivery Truck no1 15,360 Cash 15,360 (Being used truck purchased) Nov 2 Truck Repair expense 170 Cash 170 (Being payment made for truck repair) December 31 Depreciation expense -Delivery Truck 7,680 Accumulated depreciation - Delivery Truck 7,680 (Being depreciation provided) Jan 6 Delivery Truck no 2 9,000 Cash 9,000 (Being truck purchased) April 1 Depreciation expense -Delivery Truck 960 Accumulated depreciation - Delivery Truck 960 (Being depreciation provided) April 1 Cash 6,270 Accumulated depreciation - Delivery Truck [13000+1625] 8,640 Loss on sale of Truck 450 Delivery Truck 15,360 (Being loss on sale of truck 1 recorded) June 11 Truck Repair expense 430 Cash 430 (Being payment made for the repair of the truck) December 31 Depreciation expense -Delivery Truck 3,600 Accumulated depreciation - Delivery Truck 3,600 July 1 Delivery Truck 90,000 Cash 90,000 (Being truck purchased) Oct 2 Depreciation expense -Delivery Truck 1,620 Accumulated depreciation - Delivery Truck 1,620 (Being depreciation provided) Oct 2 Cash 3,480 Accumulated depreciation - Delivery Truck [24000+10800] 5,220 Loss on sale of Delivery Truck 300 Delivery Truck 9,000 (Being loss on sale of asset truck recorded) December 31 Depreciation expense - Delivery Truck 11,250 Accumulated depreciation - Delivery Truck 11,250 (Being depreciation provided) Working note: Years Delivery Truck Delivery Truck Delivery Truck Dep exp year 1 15,360×0.5= 7,680 Dep exp year 2 7,680×0.5×3/12 = 960 9,000×1/5×2 = $3,600 Dep exp year 3 5,400×1/5×2×9/12 = $ 1,620 90,000×1/8×2 ×6/12 = $ 11,250

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 $15,360, paying cash.
Nov. 2	Paid garage $170 for miscellaneous repairs to the truck.
Dec. 31	Recorded depreciation on the truck for the year. The estimated useful life of the truck is 4 years, with a residual value of $3,200 for the truck.
Year 2
Jan. 6	Purchased a new truck for $9,000, paying cash.
Apr. 1	Sold the used truck purchased on January 4 of Year 1 for $6,270. (Record depreciation to date in Year 2 for the truck.)
June 11	Paid garage $430 for miscellaneous repairs to the truck.
Dec. 31	Record depreciation for the new truck. It has an estimated residual value of $1,600 and an estimated life of 5 years.
Year 3
July 1	Purchased a new truck for $90,000, paying cash.
Oct. 2	Sold the truck purchased January 6, Year 2, for $3,480. (Record depreciation to date for Year 3 for the truck.)
Dec. 31	Recorded depreciation on the remaining truck purchased on July 1. It has an estimated residual value of $16,200 and an estimated useful life of eight 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.

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Year 1 Jan. 4	Delivery Truck	Delivery Truck
	Cash	Cash
Nov. 2	Truck Repair Expense	Truck Repair Expense
	Cash	Cash
Dec. 31	Depreciation Expense-Delivery Truck	Depreciation Expense-Delivery Truck
	Accumulated Depreciation-Delivery Truck	Accumulated Depreciation-Delivery Truck
Year 2 Jan. 6	Delivery Truck	Delivery Truck
	Cash	Cash
Apr. 1-Deprec.	Depreciation Expense-Delivery Truck	Depreciation Expense-Delivery Truck
	Accumulated Depreciation-Delivery Truck	Accumulated Depreciation-Delivery Truck
Apr. 1-Sale	Accumulated Depreciation-Delivery Truck	Accumulated Depreciation-Delivery Truck
	Cash	Cash
	Loss on Sale of Delivery Truck	Loss on Sale of Delivery Truck
	Delivery Truck	Delivery Truck
June 11	Truck Repair Expense	Truck Repair Expense
	Cash	Cash
Dec. 31	Depreciation Expense-Delivery Truck	Depreciation Expense-Delivery Truck
	Accumulated Depreciation-Delivery Truck	Accumulated Depreciation-Delivery Truck
Year 3 July 1	Delivery Truck	Delivery Truck
	Cash	Cash
Oct. 2-Deprec.	Depreciation Expense-Delivery Truck	Depreciation Expense-Delivery Truck
	Accumulated Depreciation-Delivery Truck	Accumulated Depreciation-Delivery Truck
Oct. 2-Sale	Cash	Cash
	Accumulated Depreciation-Delivery Truck	Accumulated Depreciation-Delivery Truck
	Loss on Sale of Delivery Truck	Loss on Sale of Delivery Truck
	Delivery Truck	Delivery Truck
Dec. 31	Depreciation Expense-Delivery Truck	Depreciation Expense-Delivery Truck
	Accumulated Depreciation-Delivery Truck	Accumulated Depreciation-Delivery Truck