Question

During a three-year period, Youngblood Construction Company completed the following transactions connected with its bulldozer:
Year 1
June 30 Bought a bulldozer, $ 120,400, paying $ 40,400 in cash and issuing a series of four notes for $ 20,000 each to come due at six-month intervals. Payments are to include principal plus 9 percent interest on all outstanding notes.
July 2 Paid transportation charges for the bulldozer, $ 3,600.
Dec. 31 Paid the principal, $ 20,000, on the first note, plus interest of $ 3,600 on $ 80,000 on all of the notes.
31 Made the adjusting entry to record depreciation on the bulldozer for the fiscal year, using the double-declining-balance method. The estimated life of the bulldozer is five years, and it has an estimated salvage value of $ 11,600.
31 Closed the expense accounts to the Income Summary account.
Year 2
Apr. 24 Paid for maintenance repairs to the bulldozer, $ 5,936.
June 30 Paid the principal, $ 20,000, on the second note, plus interest of $ 2,700 on $ 60,000 on the remaining notes.
Dec. 31 Paid the principal, $ 20,000, on the third note, plus interest of $ 1,800 on $ 40,000 on the remaining notes.
31 Recorded the adjusting entry for depreciation for the fiscal year.
31 Closed the expense accounts to the Income Summary account.
Year 3
May 19 Paid for maintenance repairs to the bulldozer, $ 2,185.
June 30 Paid the principal, $ 20,000, plus interest of $ 900 on $ 20,000 on the fourth note.
Sept. 29 Youngblood Construction decided to get rid of its bulldozer and use the services of an equipment rental firm in the future. Sold the bulldozer for $ 24,000 cash. Made the entry to depreciate the bulldozer to date. Made the entry to account for the sale of the bulldozer.
Dec. 31 Closed the expense accounts to the Income Summary account.

Required
1. Record the transactions in general journal form, pages 192– 194.
2. After making each journal entry, post to the following ledger accounts: Equipment, No. 141; Accumulated Depreciation, Equipment, No. 142; Equipment Maintenance Expense, No. 529; Depreciation Expense, Equipment, No. 533; Interest Expense, No. 541; and Loss on Disposal of Property and Equipment, No. 542.



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  • CreatedOctober 21, 2014
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