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Question 8

A depreciation schedule for semi-trucks of Marigold Manufacturing Company was requested by your auditor soon after December 31, 2026, showing the additions, retirements, depreciation, and other data affecting the income of the company in the 4-year period 2023 to 2026, inclusive. The following data were ascertained.

Balance of Trucks account, Jan. 1, 2023
Truck No. 1 purchased Jan. 1, 2020, cost		$18,720
Truck No. 2 purchased July 1, 2020, cost		22,880
Truck No. 3 purchased Jan. 1, 2022, cost		31,200
Truck No. 4 purchased July 1, 2022, cost		24,960
Balance, Jan. 1, 2023		$97,760

The Accumulated DepreciationTrucks account previously adjusted to January 1, 2023, and entered in the ledger, had a balance on that date of $31,408 (depreciation on the four trucks from the respective dates of purchase, based on a 5-year life, no salvage value). No charges had been made against the account before January 1, 2023. Transactions between January 1, 2023, and December 31, 2026, which were recorded in the ledger, are as follows.

July 1, 2023		Truck No. 3 was traded for a larger one (No. 5), the agreed purchase price of which was $41,600. Marigold paid the automobile dealer $22,880 cash on the transaction. The entry was a debit to Trucks and a credit to Cash, $22,880. The transaction has commercial substance.
Jan. 1, 2024		Truck No. 1 was sold for $3,640 cash; entry debited Cash and credited Trucks, $3,640.
July 1, 2025		A new truck (No. 6) was acquired for $43,680 cash and was charged at that amount to the Trucks account. (Assume truck No. 2 was not retired.)
July 1, 2025		Truck No. 4 was damaged in a wreck to such an extent that it was sold as junk for $728 cash. Marigold received $2,600 from the insurance company. The entry made by the bookkeeper was a debit to Cash, $3,328, and credits to Miscellaneous Income, $728, and Trucks, $2,600.

Entries for straight-line depreciation had been made at the close of each year as follows: 2023, $21,840; 2024, $23,400; 2025, $26,052; and 2026, $31,616.

(b)

Prepare one compound journal entry as of December 31, 2026, for adjustment of the Trucks account to reflect the correct balances as revealed by your schedule, assuming that the books have not been closed for 2026. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

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