Page 83 - Account for Ag - 2019

CH 12] Accounting for Fixed Assets & Depreciation 12-21

12-3. Instructions: (1) Open the following accounts in the ledger of Dean Lewis, using the account numbers indicated:
Transport Equipment, 121; allowance for Depreciation--Transport Equipment, 121.1; Profit and loss Summary, 313;
Equipment Repairs, 609Depreciation Expense-- Transport Equipment, 614; Loss or Gain on Disposal of Fixed Assets, 813.
(2) Record in general journal form the following transactions:
Oct. 17, 20xx. Purchased a used delivery truck for $1,650, paying cash.
Oct. 24, 20xx. Paid garage #382 for new tires and extensive repairs to delivery truck
June 30,20x1 Made adjusting entry to record depreciation. Mr. Lewis operates his business on a fiscal year ending June 30.
The estimated life of the truck is 2 years, with a salvage value of $400. The straight line method is to be used; the minimum
unit of time to be considered is a month.
June 30, 20x1. Recorded the entry to close Depreciation Expense--Transport Equipment.
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(3) Post the foregoing journal entries to the selected accounts in the ledger.
(4) Rule account No. 614.
(5) Record in general journal form the following transactions:
Apr. 10, 20x3. Traded in old truck for two new trucks priced at $3,070 each. Received a trade-in allowance of $600, paying the
balance in cash. (Record depreciation to date in 20x3; use income tax method to record the exchange.)
June 30, 20x3. Made adjusting entry to record depreciation. The estimated life of the new trucks is 4 years, with a trade-in
value of $400 each. June 30, 20x3. Recorded the entry to close Depreciation Expense--Transport Equipment.
(6) Post the foregoing entries to the selected accounts in the ledger.
(7) Balance and rule Accounts No. 121 and 121.1; rule Account No. 313 and No. 614.
(8) Record in general journal form the following transactions:
June 9, 20x4. Lewis decides to use the services of a commercial delivery service in the future. He sells the trucks for $2,000
each, receiving cash. (Record depreciation.)
June 30, 20x4. Recorded the entry to close Depreciation Expense--Transport Equipment and Loss or Gain on Disposal of Fixed
Assets.
(9) Post the foregoing journal entries to the selected accounts in the ledger.
(10) Balance and rule Account 121.1; rule Accounts No. 121, 614, and 813.

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