The following transactions, adjusting entries, and closing entries were completed by Crown 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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2006 |
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Jan. 9. |
Purchased a used delivery truck for $38,000, paying cash. |
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Mar. 15. |
Paid garage $180 for changing the oil, replacing the oil filter, and tuning the |
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engine on the delivery truck. |
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Dec. 31. |
Recorded depreciation on the truck for the fiscal year. The estimated useful life of |
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the truck is eight years, with a residual value of $7,000 for the truck. |
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2007 |
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Jan. 3. |
Purchased a new truck for $62,500, paying cash. |
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Feb. 20. |
Paid garage $150 to tune the engine and make other minor repairs on the used |
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truck. |
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Apr. 30. |
Sold the used truck for $25,000. (Record depreciation to date in 2007 for the truck.) |
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Dec. 31. |
Recorded depreciation on the truck. It has an estimated trade in value of |
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$12,000 and an estimated life of 10 years. |
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2008 |
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July 1. |
Purchased a new truck for $70,000, paying cash. |
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Oct. 6. |
Sold the truck purchased January 3, 2007, for $43,900. (Record depreciation for |
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the year.) |
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Dec. 31. |
Recorded depreciation on the remaining truck. It has an estimated residual value |
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of $4,500 and an estimated useful life of 10 years. |
Instructions
Journalize the transactions and the adjusting entries.