Question

During a three-year period, 5th Street Motel completed the following transactions pertaining to its pickup truck:
Year 1
Jan. 11 Bought a used pickup truck for cash, $ 8,800.
Nov. 16 Paid garage for maintenance repairs to pickup truck, $ 273.
Dec. 31 Recorded the adjusting entry for depreciation for the fiscal year, using the straight-line method of depreciation. The estimated life of the pickup truck is four years, and it has an estimated trade-in value of $ 2,200.
31 Closed the expense accounts to the Income Summary account.
Year 2
Mar. 4 Paid garage for tune-up and minor repairs, $ 88.
May 27 Bought a tire for the truck, $ 105.
Dec. 31 Recorded the adjusting entry for depreciation for the fiscal year.
31 Closed the expense accounts to the Income Summary account.
Year 3
Feb. 13 Paid garage for maintenance repairs to pickup truck, $ 436.
June 22 Traded in the pickup truck for another pickup truck priced at $ 9,460, receiving a trade-in allowance of $ 1,040 and paying the difference in cash. Recorded the entry to depreciate the old truck to date. Made the entry to record the exchange assuming that the exchange has “commercial substance.”
Dec. 31 Recorded the adjusting entry for depreciation of the new pickup truck for the fiscal year, using the straight-line method of depreciation. The estimated life of the new truck is six years, and it has an estimated trade-in value of $ 2,500.
31 Closed the expense accounts to the Income Summary account.

Required
1. Record the transactions in general journal form, pages 97 and 98.
2. After journalizing each entry, post to the following ledger accounts: Truck, No. 131; Accumulated Depreciation, Truck, No. 132; Truck Repair Expense, No. 519; Depreciation Expense, Truck, No. 523; and Loss on Disposal of Property and Equipment, No. 640.



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  • CreatedOctober 21, 2014
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