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 $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. Year 2 Jan. 6 Purchased a new truck for $48,000, paying cash. Apr. 1 Sold the used truck purchased on January 4 of Year 1 for $15,000. (Record depreciation to date in Year 2 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. Year 3 July 1 Purchased a new truck for $54,000, paying cash. Oct. 2 Sold the truck purchased January 6, Year 2, for $16,750. (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 $12,000 and an estimated useful life of eight years. CHART OF ACCOUNTSLegacy Furniture Co.General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 123 Delivery Truck 124 Accumulated Depreciation-Delivery Truck 125 Equipment 126 Accumulated Depreciation-Equipment 130 Mineral Rights 131 Accumulated Depletion 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Owner's Capital 311 Owner's Drawing REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale of Delivery Truck 621 Gain on Sale of Equipment EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Delivery Truck 523 Delivery Expense 525 Truck Repair Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Equipment 533 Depletion Expense 534 Amortization Expense-Patents 535 Insurance Expense 536 Supplies Expense 539 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Delivery Truck 721 Loss on Sale of Equipment Journalize the transactions and the adjusting entries.

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 $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. Year 2 Jan. 6 Purchased a new truck for $48,000, paying cash. Apr. 1 Sold the used truck purchased on January 4 of Year 1 for $15,000. (Record depreciation to date in Year 2 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. Year 3 July 1 Purchased a new truck for $54,000, paying cash. Oct. 2 Sold the truck purchased January 6, Year 2, for $16,750. (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 $12,000 and an estimated useful life of eight years. CHART OF ACCOUNTSLegacy Furniture Co.General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 123 Delivery Truck 124 Accumulated Depreciation-Delivery Truck 125 Equipment 126 Accumulated Depreciation-Equipment 130 Mineral Rights 131 Accumulated Depletion 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Owner's Capital 311 Owner's Drawing REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale of Delivery Truck 621 Gain on Sale of Equipment EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Delivery Truck 523 Delivery Expense 525 Truck Repair Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Equipment 533 Depletion Expense 534 Amortization Expense-Patents 535 Insurance Expense 536 Supplies Expense 539 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Delivery Truck 721 Loss on Sale of Equipment Journalize the transactions and the adjusting entries.

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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Year 1
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.
Year 2
Jan. 6	Purchased a new truck for $48,000, paying cash.
Apr. 1	Sold the used truck purchased on January 4 of Year 1 for $15,000. (Record depreciation to date in Year 2 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.
Year 3
July 1	Purchased a new truck for $54,000, paying cash.
Oct. 2	Sold the truck purchased January 6, Year 2, for $16,750. (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 $12,000 and an estimated useful life of eight years.

CHART OF ACCOUNTSLegacy Furniture Co.General Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
114	Interest Receivable
115	Notes Receivable
116	Merchandise Inventory
117	Supplies
119	Prepaid Insurance
120	Land
123	Delivery Truck
124	Accumulated Depreciation-Delivery Truck
125	Equipment
126	Accumulated Depreciation-Equipment
130	Mineral Rights
131	Accumulated Depletion
132	Goodwill
133	Patents

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Owner's Capital
311	Owner's Drawing

	REVENUE
410	Sales
610	Interest Revenue
620	Gain on Sale of Delivery Truck
621	Gain on Sale of Equipment

	EXPENSES
510	Cost of Merchandise Sold
520	Salaries Expense
521	Advertising Expense
522	Depreciation Expense-Delivery Truck
523	Delivery Expense
525	Truck Repair Expense
529	Selling Expenses
531	Rent Expense
532	Depreciation Expense-Equipment
533	Depletion Expense
534	Amortization Expense-Patents
535	Insurance Expense
536	Supplies Expense
539	Miscellaneous Expense
710	Interest Expense
720	Loss on Sale of Delivery Truck
721	Loss on Sale of Equipment

Journalize the transactions and the adjusting entries. Scroll down to access pages 2 and 3 of the journal. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Journalize the Year 1 transactions and adjusting entries on Page 1.

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5	------	Adjusting Entries	----------	-----	-------	--------	--------------	----------
6
7

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