Instructions The following transactions and adjusting entrie

Instructions 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 tour 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 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 ife of five years Year 3 July 1. Oct. 2. Purchased a new truck for $54,000, paying cash. Sold the truck purchased January 6, Year 2, for $16.750. (Reoord depreciation to date for Year 3 for the truck.)

Solution

Date Description Post Ref Debit Credit Year 1 4-Jan Delivery truck 28,000.00 Cash 28,000.00 2-Nov Truck repair expense 675.00 Cash 675.00 31-Dec Depreciation expense - Delivery truck 14,000.00 Accumulated depreciation - delivery truck 14,000.00 Year 2 6-Jan Delivery truck 48,000.00 Cash 48,000.00 1-Apr Depreciation expense - Delivery truck 1,750.00 Accumulated depreciation - delivery truck 1,750.00 1-Apr Accumulated depreciation - delivery truck 15,750.00 Cash 15,000.00 Delivery truck 28,000.00 Gain on sale of delivery truck 2,750.00 11-Jun Truck repair expense 450.00 Cash 450.00 31-Dec Depreciation expense - Delivery truck 19,200.00 Accumulated depreciation - delivery truck 19,200.00 Year 3 1-Jul Delivery truck 54,000.00 Cash 54,000.00 2-Oct Depreciation expense - Delivery truck 8,640.00 Accumulated depreciation - delivery truck 8,640.00 (48000-19200)*(1/5*2)*9/12 2-Oct Cash 16,750.00 Accumulated depreciation - delivery truck 27,840.00 Loss on sale of delivery truck 3,410.00 Delivery truck 48,000.00 31-Dec Depreciation expense - Delivery truck 6,750.00 Accumulated depreciation - delivery truck 6,750.00 (54000*(1/8*2)*1/2)