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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2010
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Jan. 4.
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Purchased a used delivery truck for $61,440, paying cash.
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Feb. 24.
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Paid garage $220 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 8 years, with a residual value of $12,900 for the truck.
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2011
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Jan. 3.
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Purchased a new truck for $70,560, paying cash.
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Mar. 7.
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Paid garage $330 to tune the engine and make other minor repairs on the used truck.
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Apr. 30.
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Sold the used truck for $40,440. (Record depreciation to date in 2011 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 $12,700 and an estimated life of 7 years.
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2012
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July 1.
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Purchased a new truck for $81,000, paying cash.
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Oct. 7.
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Sold the truck purchased January 3, 2011, for $41,700. (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 $14,600 and an estimated useful life of 10 years.
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Instructions:Journalize the transaction and the adjusting entries.