Transactions for Fixed Assets, Including Sale
The following transactions, adjusting entries, and closing entries were completed by King 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.
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2012
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Jan. 4.
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Purchased a used delivery truck for $28000, paying cash.
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nov 2.
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Paid garage $675 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck.
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Dec. 31.
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Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is 4 years,
with a residual value of $5000 for the truck.
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2013
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Jan. 6.
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Purchased a new truck for $48,000, paying cash.
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june 11.
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Paid garage $450 to tune the engine and make other minor repairs on the used truck.
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Apr. 1.
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Sold the used truck for $15000 (Record depreciation to date in 2013 for the truck.)
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Dec. 31.
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Record depreciation for the new truck. It has an estimated trade-in value of $9000 and an estimated life of 7 years.
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2014
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July 1.
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Purchased a new truck for $54,000, paying cash.
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Oct. 2.
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Sold the truck purchased January 6, 2013, for $16750. (Record depreciation for the year.)
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Dec. 31.
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Recorded depreciation on the remaining truck. It has an estimated residual value of $12000
and an estimated useful life of 8 years.
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Instructions:
Journalize the transaction and the adjusting entries.