PR 10-5A Transactions for fixed assets, including sale
The following transactions, adjusting entries, and closing entries were completed by D. Hurd 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.
2010 Jan. 9. Purchased a used delivery truck for $30,000, paying cash.
Mar. 17. Paid garage $400 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 $6,000 for the truck.
2011 Jan. 2. Purchased a new truck for $48,000, paying cash.
Aug 1. Sold the used truck for $12,500. (Record depreciation to date in 2011 for the truck.)
Sept. 23. Paid garage $325 for miscellaneous repairs to the truck.
Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $11,000 and an estimated life of fi ve years.
2012 July 1. Purchased a new truck for $52,000, paying cash. Oct.
2. Sold the truck purchased January 2, 2011, for $17,000. (Record depreciation for the year.)
Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $14,000 and an estimated useful life of eight years.
Instructions Journalize the transactions and the adjusting entries.
Answer:
2010 Jan. 9 Delivery Equipment...................................................... 30,000
Cash......................................................................... 30,000
Mar. 17 Truck Repair Expense.................................................. 400
Cash......................................................................... 400
Dec. 31 Depreciation Expense—Delivery Equipment............. 15,000
Accumulated Depreciation—Delivery Equipment 15,000
Delivery equipment depreciation. [$30,000 × (1/4 × 2)]
2011 Jan. 2 Delivery Equipment...................................................... 48,000
Cash......................................................................... 48,000
Aug. 1 Depreciation Expense—Delivery Equipment............. 4,375
Accumulated Depreciation—Delivery Equipment 4,375
Delivery equipment depreciation.
[$30,000 – $15,000 × (1/4 × 2) × 7/12]
1 Accumulated Depreciation—Delivery Equipment ..... 19,375
Cash............................................. 12,500
Delivery Equipment...................................... 30,000
Gain on Sale of Delivery Equipment...................... 1,875
Sept. 23 Truck Repair Expense.................................................. 325
Cash......................................................................... 325
Dec. 31 Depreciation Expense—Delivery Equipment............. 19,200
Accumulated Depreciation—Delivery Equipment 19,200
Delivery equipment depreciation. [$48,000 × (1/5 × 2)]
2012 July 1 Delivery Equipment...................................................... 52,000
Cash......................................................................... 52,000
Oct. 2 Depreciation Expense—Delivery Equipment............. 8,640
Accumulated Depreciation—Delivery Equipment 8,640
Delivery equipment depreciation.
[$48,000 – $19,200 × (1/5 × 2) × 9/12]
2 Cash................................................ 17,000
Accumulated Depreciation—Delivery Equipment ........ 27,840
Loss on Sale of Delivery Equipment................... 3,160
Delivery Equipment......................................... 48,000
Dec. 31 Depreciation Expense—Delivery Equipment............. 6,500
Accumulated Depreciation—Delivery Equipment................ 6,500
Delivery equipment depreciation. [$52,000 × (1/8 × 2) × 1/2]
2010 Jan. 9. Purchased a used delivery truck for $30,000, paying cash.
Mar. 17. Paid garage $400 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 $6,000 for the truck.
2011 Jan. 2. Purchased a new truck for $48,000, paying cash.
Aug 1. Sold the used truck for $12,500. (Record depreciation to date in 2011 for the truck.)
Sept. 23. Paid garage $325 for miscellaneous repairs to the truck.
Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $11,000 and an estimated life of fi ve years.
2012 July 1. Purchased a new truck for $52,000, paying cash. Oct.
2. Sold the truck purchased January 2, 2011, for $17,000. (Record depreciation for the year.)
Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $14,000 and an estimated useful life of eight years.
Instructions Journalize the transactions and the adjusting entries.
Answer:
2010 Jan. 9 Delivery Equipment...................................................... 30,000
Cash......................................................................... 30,000
Mar. 17 Truck Repair Expense.................................................. 400
Cash......................................................................... 400
Dec. 31 Depreciation Expense—Delivery Equipment............. 15,000
Accumulated Depreciation—Delivery Equipment 15,000
Delivery equipment depreciation. [$30,000 × (1/4 × 2)]
2011 Jan. 2 Delivery Equipment...................................................... 48,000
Cash......................................................................... 48,000
Aug. 1 Depreciation Expense—Delivery Equipment............. 4,375
Accumulated Depreciation—Delivery Equipment 4,375
Delivery equipment depreciation.
[$30,000 – $15,000 × (1/4 × 2) × 7/12]
1 Accumulated Depreciation—Delivery Equipment ..... 19,375
Cash............................................. 12,500
Delivery Equipment...................................... 30,000
Gain on Sale of Delivery Equipment...................... 1,875
Sept. 23 Truck Repair Expense.................................................. 325
Cash......................................................................... 325
Dec. 31 Depreciation Expense—Delivery Equipment............. 19,200
Accumulated Depreciation—Delivery Equipment 19,200
Delivery equipment depreciation. [$48,000 × (1/5 × 2)]
2012 July 1 Delivery Equipment...................................................... 52,000
Cash......................................................................... 52,000
Oct. 2 Depreciation Expense—Delivery Equipment............. 8,640
Accumulated Depreciation—Delivery Equipment 8,640
Delivery equipment depreciation.
[$48,000 – $19,200 × (1/5 × 2) × 9/12]
2 Cash................................................ 17,000
Accumulated Depreciation—Delivery Equipment ........ 27,840
Loss on Sale of Delivery Equipment................... 3,160
Delivery Equipment......................................... 48,000
Dec. 31 Depreciation Expense—Delivery Equipment............. 6,500
Accumulated Depreciation—Delivery Equipment................ 6,500
Delivery equipment depreciation. [$52,000 × (1/8 × 2) × 1/2]
