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. Instructions Journalize the transactions and the adjusting entries.
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. Instructions Journalize the transactions and the adjusting entries.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text: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.
Instructions
Journalize the transactions and the adjusting entries.
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