Transactions for Fixed Assets, Including Sale The following transactions, adjusting entries, and closing entries were completed by King 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. 2012 Jan. 4. nov 2. Dec. 31. 2013 Jan. 6. june 11. Apr. 1. Dec. 31. 2014 July 1. Oct. 2. Dec. 31. Purchased a used delivery truck for $28000, paying cash. Paid garage $675 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck. Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is 4 years, with a residual value of $5000 for the truck. Purchased a new truck for $48,000, paying cash. Paid garage $450 to tune the engine and make other minor repairs on the used truck. Sold the used truck for $15000 (Record depreciation to date in 2013 for the truck.) Record depreciation for the new truck. It has an estimated trade-in value of $9000 and an estimated life of 7 years. Purchased a new truck for $54,000, paying cash. Sold the truck purchased January 6, 2013, for $16750. (Record depreciation for the year.) Recorded depreciation on the remaining truck. It has an estimated residual value of $12000 and an estimated useful life of 8 years. Instructions: Journalize the transaction and the adjusting entries.
Transactions for Fixed Assets, Including Sale The following transactions, adjusting entries, and closing entries were completed by King 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. 2012 Jan. 4. nov 2. Dec. 31. 2013 Jan. 6. june 11. Apr. 1. Dec. 31. 2014 July 1. Oct. 2. Dec. 31. Purchased a used delivery truck for $28000, paying cash. Paid garage $675 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck. Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is 4 years, with a residual value of $5000 for the truck. Purchased a new truck for $48,000, paying cash. Paid garage $450 to tune the engine and make other minor repairs on the used truck. Sold the used truck for $15000 (Record depreciation to date in 2013 for the truck.) Record depreciation for the new truck. It has an estimated trade-in value of $9000 and an estimated life of 7 years. Purchased a new truck for $54,000, paying cash. Sold the truck purchased January 6, 2013, for $16750. (Record depreciation for the year.) Recorded depreciation on the remaining truck. It has an estimated residual value of $12000 and an estimated useful life of 8 years. Instructions: Journalize the transaction and the adjusting entries.
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles
Section: Chapter Questions
Problem 8.6E
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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:Transactions for Fixed Assets, Including Sale
The following transactions, adjusting entries, and closing entries were completed by King 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.
2012
Jan. 4.
nov 2.
Dec.
31.
2013
Jan. 6.
june 11.
Apr. 1.
Dec.
31.
2014
July 1.
Oct. 2.
Dec.
31.
Purchased a used delivery truck for $28000, paying cash.
Paid garage $675 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck.
Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is 4 years,
with a residual value of $5000 for the truck.
Purchased a new truck for $48,000, paying cash.
Paid garage $450 to tune the engine and make other minor repairs on the used truck.
Sold the used truck for $15000 (Record depreciation to date in 2013 for the truck.)
Record depreciation for the new truck. It has an estimated trade-in value of $9000 and an estimated life
of 7 years.
Purchased a new truck for $54,000, paying cash.
Sold the truck purchased January 6, 2013, for $16750. (Record depreciation for the year.)
Recorded depreciation on the remaining truck. It has an estimated residual value of $12000
and an estimated useful life of 8 years.
Instructions:
Journalize the transaction and the adjusting entries.
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