Question

During a three-year period, Abrams Electric completed the following transactions related to its service truck:
Year 1
Jan. 4 Bought a used service truck for cash, $ 18,600.
Nov. 21 Paid garage for maintenance repairs to the truck, $ 146
Dec. 31 Recorded the adjusting entry for depreciation for the fiscal year. The estimated life of the truck is four years, and it has an estimated salvage value of $ 3,800. Abrams uses the straight-line method of depreciation
31 Closed the expense accounts to the Income Summary account.
Year 2
Apr. 2 Paid garage for tune-up of truck, $ 86.
May 24 Bought tires for the truck, $ 335.
Dec. 31 Recorded the adjusting entry for depreciation for the fiscal year. 31 Closed the expense accounts to the Income Summary account.
31 Closed the expense accounts to the Income Summary account
Year 3
June 6 Paid garage for maintenance repairs to truck, $ 362.
27 Traded in the used truck for a new truck that cost $ 22,800, receiving a trade-in allowance of $ 7,500 and paying the difference in cash. Recorded the entry to depreciate the truck up to the present 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 truck for the fiscal year. The estimated life of the truck is six years, and it has an estimated trade-in value of $ 2,600. Abrams Electric uses the straight- line method of depreciation.
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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