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babydolltia28
11.02.2020 •
Business
The following transactions, adjusting entries, and closing 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. 2014 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 four years, with a residual value of $5,000 for the truck. 2015 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 2015 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 life of five years. 2016 July 1. Purchased a new truck for $54,000, paying cash. Oct. 2. Sold the truck purchased January 6, 2015, for $16,750. (Record depreciation to date for 2016 for the truck.) Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $12,000 and an estimated useful life of eight years. Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles. Be sure to include the YEAR in the date for the FIRST transaction on each page.
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Ответ:
Please see the Journal entries of Legacy Furniture Co. during a three year period, below:
Explanation:
(1)
Jan. 4, 2014
Debit: Delivery Truck $28,000
Credit: Cash $28,000
To record purchase of Delivery Truck.
(2)
Nov. 2, 2014
Debit: Miscellaneous Repairs Expense $675
Credit: Cash $675
To record payment of miscellaneous repairs expense.
(3)
Dec. 31, 2014
Debit: Depreciation Expense $14,000
Credit: Accumulated Depreciation $14,000
To Record double-declining depreciation expense.
Depreciation Expense Calculation:
Depreciation Rate = 1 / Estimated Useful Life
Decipherable Rate = 1 / 4
Decipherable Rate = 0.25
or
Decipherable Rate = 25%
Double Declining Decipherable Rate = 2 x 25%
Double Declining Decipherable Rate = 50%
Depreciation Expense = Book Value x Double Declining Decipherable Rate
Depreciation Expense = $28,000 x 50%
Depreciation Expense = $14,000
(4)
Jan. 6, 2015
Debit: Delivery Truck $48,000
Credit: Cash $48,000
To record purchase of new Delivery Truck.
(5)
Apr. 1, 2015
Debit: Cash $15,000
Debit: Accumulated Depreciation $15,750
Credit: Delivery Truck $28,000
Credit: Gain on Sale $2,750
To record Sale of Used Truck.
Apr. 1, 2015
Debit: Depreciation Expense $1,750
Credit: Accumulated Depreciation $1,750
To Record Depreciation Expense of Used Truck.
Accumulated Depreciation & Proceed from Sale Calculation:
Year 1:
Depreciation Expense = $14,000
Year 2 New Book Value = $28,000 - $14,000
Year 2 New Book Value = $14,000
3 Months in Year 2:
Pro Rated Depreciation Expense for Used Truck
= New Book Value x Rate x No. of months used/Total No. of months in year
= $14,000 x 50% x 3/12
= $1,750
Accumulated Depreciation = $14,000 + $1,750
Accumulated Depreciation = $15,750
Net Value of Used Truck = Book Value - Accumulated Depreciation
Net Value of Used Truck = $28,000 - $15,750
Net Value of Used Truck = $12,250
Gain on Sale of Used Truck = Sale Price - Net Value
Gain on Sale of Used Truck = $15,000 - $12,250
Gain on Sale of Used Truck = $2,750
(6)
June 11, 2015
Debit: Miscellaneous Repairs Expense $450
Credit: Cash $450
To record payment of miscellaneous repairs expense.
(7)
Dec. 31, 2015
Debit: Depreciation Expense $19,200
Credit: Accumulated Depreciation $19,200
To Record double-declining depreciation expense.
Depreciation Expense Calculation:
Depreciation Rate = 1 / Estimated Useful Life
Decipherable Rate = 1 / 5
Decipherable Rate = 0.20
or
Decipherable Rate = 20%
DDR = Double Declining Rate = 2 x 20%
DDR = Double Declining Rate = 40%
Depreciation Expense = Decipherable Asset Cost x Decipherable Rate
Depreciation Expense = $48,000 x 40%
Depreciation Expense = $19,200
(8)
July 1,2016
Debit: Delivery Truck $54,000
Credit: Cash $54,000
To record purchase of new Delivery Truck.
(9)
Oct. 2, 2016
Debit: Cash $16,750
Debit: Loss on Sale $3,410
Debit: Accumulated Depreciation $27,840
Credit: Delivery Truck $48,000
To record Sale of New Truck purchased in 2015.
Oct. 2, 2016
Debit: Depreciation Expense $8,640
Credit: Accumulated Depreciation $8,640
To Record Depreciation Expense of New Truck purchased in 2015.
Accumulated Depreciation & Proceed from Sale Calculation:
Year 1:
Depreciation Expense = $19,200
Year 2 New Book Value = $48,000 - $19,200
Year 2 New Book Value = $28,800
9 Months in Year 2:
Pro Rated Depreciation Expense for Used Truck
= New Book Value x DDR x No. of months used / Total No. of months in year
= $28,800 x 40% x 9 / 12
= $8,640
Accumulated Depreciation = $19,200 + $8,640
Accumulated Depreciation = $27,840
Net Value of Used Truck = Book Value - Accumulated Depreciation
Net Value of Used Truck = $48,000 - $27,840
Net Value of Used Truck = $20,160
(Loss) on Sale of Used Truck = Sale Price - Net Value
(Loss) on Sale of Used Truck = $16,750 - $20,160
(Loss) on Sale of Used Truck = ($3,410)
(10)
Dec. 31, 2016
Debit: Depreciation Expense $13,500
Credit: Accumulated Depreciation $13,500
To Record double-declining depreciation expense.
Depreciation Expense Calculation:
Depreciation Rate = 1 / Estimated Useful Life
Decipherable Rate = 1 / 8
Decipherable Rate = 0.125
or
Decipherable Rate = 12.50%
DDR = Double Declining Rate = 2 x 12.50%
DDR = Double Declining Rate = 25%
Depreciation Expense = Book Vale x DDR
Depreciation Expense = $54,000 x 25%
Depreciation Expense = $13,500
New Book Value = $54,000 - $13,500
New Book Value = $40,500
Ответ: