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Transactions for Fixed Assets, Including Sale The following transactions and adjusting entries were completed by Robinson 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. 8. Purchased a used delivery truck for $38,400, paying cash. Mar. 7. Paid garage $170 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck. Dec. 31. Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is 8 years, with a residual value of $8,100 for the truck. Year 2 Jan. 9. Purchased a new truck for $44,100, paying cash. Feb. 28. Paid garage $320 to tune the engine and make other minor repairs on the used truck. Apr. 30. Sold the used truck for $25,300. (Record depreciation to date in Year 2 for the truck.) Dec. 31. Record depreciation for the new truck. It has an estimated trade-in value of $7,900 and an estimated life of 7 years. Year 3 Sept. 1. Purchased a new truck for $96,000, paying cash. Sept. 4. Sold the truck purchased January 9, Year 2, for $26,800. (Record depreciation to date in Year 3 for the truck.) Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $17,300 and an estimated useful life of 10 years. Required: Journalize the transactions and the adjusting entries. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations. Round your final answers to the nearest cent.

Sagot :

In a company's accounting records, a journal entry is used to document a business transaction. Entries for Robinson Furniture Co. are given below:

Year 1

Jan. 8. Purchased a used delivery truck for $38,400, paying cash.

  • Dr Truck 38,400
  •    Cr Cash 38,400

Mar. 7. Paid garage $170 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck.

  • Dr Maintenance expenses - Truck 170
  •    Cr Cash 170

Dec. 31. Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is eight years, with a residual value of $8,100 for the truck.

Depreciation expense = 2 x 0.25 x $38,400 = $19,200

  • Dr Depreciation expense 19,200
  •    Cr Accumulated depreciation - truck 19,200

Year 2

Jan. 9. Purchased a new truck for $44,100, paying cash.

  • Dr Truck new 44,100
  •    Cr Cash 44,100

Feb. 28. Paid garage $320to tune the engine and make other minor repairs on the used truck.

  • Dr Maintenance expenses - Truck 320
  •    Cr Cash 320

Apr. 30. Sold the used truck for $25,300. (Record depreciation to date in Year 2 for the truck.)

depreciation expense = 2 x 0.25 x 4/12 x $19,200 = $3,200

  • Dr Depreciation expense 3,200
  •    Cr Accumulated depreciation - truck 3,200

truck sold at $25,300 - $16,000 (carrying value) = -$9,300 profit on sale

  • Dr Cash 25,300
  • Dr Accumulated depreciation 22,400
  •    Cr Profit on truck 9,300
  •    Cr Truck 38,400

Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $7,900 and an estimated life of seven years.

Depreciation expense = 2 x 0.125 x $44,100 = $22,050

  • Dr Depreciation expense 22,050
  •    Cr Accumulated depreciation - truck new 22,050

Year 3

Sept. 1. Purchased a new truck for $96,000, paying cash.

  • Dr Truck three 96,000
  •    Cr Cash 96,000

Sept. 4. Sold the truck purchased January 9, Year 2, for $26,800. (Record depreciation to date for Year 3 for the truck.)

Depreciation expense = 2 x 0.125 x 8/12 x $22,050 = $3,675

  • Dr Depreciation expense 3,675
  •    Cr Accumulated depreciation - truck new 3,675

truck sold at $26,800 - $18,375 (carrying value) = $8,425gain on sale

  • Dr Cash 26,800
  • Dr Accumulated depreciation 25,725
  •    Cr Truck new 44,100
  •    Cr Gain on sale - truck new 8,425

Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $17,300 and an estimated useful life of 10 years.

Depreciation expense = 2 x 0.1 x 4/12 x $96,000 = $6,400

  • Dr Depreciation expense 6,400
  •    Cr Accumulated depreciation - truck three 6,400

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