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

A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.

of depreciation

The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.

is used.

2014
Jan. 4.	Purchased a used delivery truck for $27,200, paying cash.
Nov. 2.	Paid garage $630 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 The estimated value of a fixed asset at the end of its useful life. of $5,005 for the truck.
2015
Jan. 6.	Purchased a new truck for $49,250, paying cash.
Apr. 1.	Sold the used truck for $14,670. (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 $8,950 and an estimated life of five years.
2016
July 1.	Purchased a new truck for $53,920, paying cash.
Oct. 2.	Sold the truck purchased January 6, 2015, for $17,125. (Record depreciation to date for 2016 for the truck.)
Dec. 31.	Recorded depreciation on the remaining truck. It has an estimated residual value of $12,945 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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Chart of Accounts

CHART OF ACCOUNTS

Legacy Furniture Co.

General Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
114	Interest Receivable
115	Notes Receivable
116	Merchandise Inventory
117	Supplies
119	Prepaid Insurance
120	Land
123	Delivery Truck
124	Accumulated Depreciation-Delivery Truck
125	Equipment
126	Accumulated Depreciation-Equipment
130	Mineral Rights
131	Accumulated Depletion
132	Goodwill
133	Patents

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	REVENUE
410	Sales
610	Interest Revenue
620	Gain on Sale of Delivery Truck
621	Gain on Sale of Equipment

	EXPENSES
510	Cost of Merchandise Sold
520	Salaries Expense
521	Advertising Expense
522	Depreciation Expense-Delivery Truck
523	Delivery Expense
525	Truck Repair Expense
529	Selling Expenses
531	Rent Expense
532	Depreciation Expense-Equipment
533	Depletion Expense
534	Amortization Expense-Patents
535	Insurance Expense
536	Supplies Expense
539	Miscellaneous Expense
710	Interest Expense
720	Loss on Sale of Delivery Truck
721	Loss on Sale of Equipment

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Journal

Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 2 and 3 of the journal. Be sure to include the YEAR in the date for the FIRST transaction on each page.

Journalize the 2014 transactions and adjusting entries on Page 1. Be sure to include the YEAR in the date for the FIRST transaction.

PAGE 1

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5		Adjusting Entries
6
7

Solution

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5		Adjusting Entries
6
7

Points:

Journalize the 2015 transactions and adjusting entries on Page 2. Be sure to include the YEAR in the date for the FIRST transaction.

PAGE 2

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11		Adjusting Entries
12
13

Solution

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11		Adjusting Entries
12
13

Points:

Journalize the 2016 transactions and adjusting entries on Page 3. Be sure to include the YEAR in the date for the FIRST transaction.

PAGE 3

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9		Adjusting Entries
10
11

Solution

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9		Adjusting Entries
10
11