Question

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 $110 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 $300 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 $93,000, 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 $16,700 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.

Answer 1

Answer
Date	General Journal	Debit	Credit
Year 1
Jan-08	Equipment - Delivery Truck	$38,400
	Cash		$38,400
	(To Record truck Purchased)
Mar-07	Repairs Expense	$     110
	Cash		$     110
	(To Record Garage expenses paid)
Dec-31	Depreciation Expense - delivery truck	$ 9,600
	Accumulated depreciation - delivery truck		$ 9,600	38400*1/8*2
Year 2
Jan-09	Equipment - Delivery Truck	$44,100
	Cash		$44,100
Feb-28	Repairs Expense	$     300
	Cash		$     300
Apr-30	Depreciation Expense - delivery truck	$ 2,400		(38400-9600)*1/8*4/12
	Accumulated depreciation - delivery truck		$ 2,400
	[[38400-9600] * 1/8*2*4/12]
Apr-30	Cash	$25,300
	Loss on sale of equipment - delivery truck	$ 1,100
	Accumulated depreciation - delivery truck	$12,000		2400+9600
	Equipment - Delivery Truck		$38,400
Dec-31	Depreciation Expense - delivery truck	$12,600		44100*1/7*2
	Accumulated depreciation - delivery truck		$12,600
	[44100 * 1/7*2]
Year 3
Sep-01	Equipment - Delivery Truck	$93,000
	Cash		$93,000
	(To Record Delivery truck purchased)
Sep-04	Depreciation Expense - delivery truck	$ 6,000
	Accumulated depreciation - delivery truck		$ 6,000	(44100-12600] * 1/7*2*8/12
	Cash	$26,800
	Accumulated depreciation - delivery truck	$18,600		12600+6000
	Equipment - Delivery Truck		$44,100
	Gain on sale of equipment - delivery truck		$ 1,300	26800+18600-44100
	Depreciation Expense - delivery truck	$ 6,200
	Accumulated depreciation - delivery truck		$ 6,200	[93000*1/10*2*4/12