Year 2 Jan. 6. Purchased a new truck for $60,000, paying cash. Apr. 1. Sold the used truck for $14,000. (Record depreciation to date in Year 2 for the truck.) June 11. Paid garage $280 for miscellaneous repairs to the truck. Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $7,000 and an estimated life of five years. Year 3 July 1. Purchased a new truck for $65,000, paying cash. Oct. 2. Sold the truck purchased January 6, Year 2, for $19,520. (Record depreciation to date for Year 3 for the truck.) Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $6,000 and an estimated useful life of eight years. Instructions Journalize the transactions and the adjusting entries.

Depreciation Expense = 2 x Straight Line Depreciation Rate x Book Value Straight Line Depreciation Rate = 1Useful LifeDate Accounts Title Debit Credit Year 1 04-Jan Delivery Truck 26,000 Cash 26,000 02-Nov Truck Repairs and Maintenance Expense 825 Cash 825 31-Dec Depreciation Expense- Delivery Truck 13,000 Accumulated Depreciation- Delivery Truck 13,000 Year 2 06-Jan Delivery Truck 60,000 Cash 60,000 01-Apr Depreciation Expense- Delivery Truck 1,625 Accumulated Depreciation- Delivery Truck 1,625 01-Apr Cash 14,000 Accumulated Depreciation- Delivery Truck 14,625 Delivery Truck 26,000 Gain on Sale of Delivery Truck 2,625 11-Jun Truck Repairs and Maintenance Expense 280 Cash 280 31-Dec Depreciation Expense- Delivery Truck 24,000 Accumulated Depreciation- Delivery Truck 24,000 Year 3 01-Jul Delivery Truck 65,000 Cash 65,000 02-Oct Depreciation Expense- Delivery Truck 10,800 Accumulated Depreciation- Delivery Truck 10,800 02-Oct Cash 19,520 Accumulated Depreciation- Delivery Truck 34,800 Loss on Sale of Delivery Truck 5,680 Delivery Truck 60,000 31-Dec Depreciation Expense- Delivery Truck 8,125 Accumulated Depreciation- Delivery Truck 8,125 Workings Depreciation Workings for Used Truck purchased during Year 1 Year Beginning Book Value Rate Number of Months Depreciation Expense Ending Book Value 1 26,000 50% 12 13,000 13,000 2 13,000 50% 3 1,625 11,375 Depreciation Rate = 2 x (1/4) = 50% Depreciation Workings for Truck purchased during Year 2 Year Beginning Book Value Rate Number of Months Depreciation Expense Ending Book Value 2 60,000 40% 12 24,000 36,000 3 36,000 40% 9 10,800 25,200 Depreciation Rate = 2 x (1/5) = 40% Depreciation Workings for Truck purchased during Year 3 Year Beginning Book Value Rate Number of Months Depreciation Expense Ending Book Value 3 65,000 25% 6 8,125 56,875 Depreciation Rate = 2 x (1/8) = 25%

Answered: Year 2 Jan. 6. Purchased a new truck for $60,000, paying cash. Apr. 1. Sold the used truck for $14,000. (Record depreciation to date in Year 2 for the truck.)…

FINANCIAL ACCOUNTING

10th Edition

ISBN: 9781259964947

Author: Libby

Publisher: MCG

See similar textbooks

Concept explainers

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investme…

Question

The question is the instructions part

487
Chapter 9 Long-Term Assets: Fixed and Intangible
Year 2
Jan. 6. Purchased a new truck for $60,000, paying cash.
1. Sold the used truck for $14,000. (Record depreciation to date in Year 2 for the truck.)
Apr.
June 11. Paid garage $280 for miscellaneous repairs to the truck.
Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $7,000 and an estimated life of
five years.
Year 3
July 1. Purchased a new truck for $65,000, paying cash.
2. Sold the truck purchased January 6, Year 2, for $19,520. (Record depreciation to date for Year 3 for the truck.)
Oct.
Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $6,000 and an estimated
useful life of eight years.
Instructions
Journalize the transactions and the adjusting entries.

PR 9-5A 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.
Obj. 1, 2, 3
Year 1
Jan. 4. Purchased a used delivery truck for $26,000, paying cash.
Nov. 2. Paid garage $825 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 $2,000 for the truck.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution

See solution Check out a sample Q&A here

Formula

VIEW

Solution

VIEW

Similar questions

What is a management control system?
What is the confirmation process?
What are the assumptions, focus, and hypothesis of agency theory?

Recommended textbooks for you

FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education