The general ledger of Rafferty Insurance Agency includes

controlling accounts
The general ledger of Rafferty Insurance Agency includes controlling accounts for Office
Equipment, No. 123, and Accumulated Depreciation, Office Equipment, No. 124. Rafferty’s
accountant also records the details of each item of office equipment in a subsidiary ledger. The
following transactions affecting office equipment occurred during a three-year period: Year 1
Jan. 4 Bought the following from Poland Office Supplies for cash: Executive desk, $ 1,028,
account no. 123-1, estimated life eight years, salvage value zero. Executive chair, $ 375,
account no. 123-2, estimated life three years, salvage value zero. Filing cabinet, metal, $ 300,
account no. 123-3, estimated life five years, salvage value zero. (The above assets will be
depreciated using the straight-line method.) 9 Paid French Cabinet Shop $ 2,080 for a custom-
made counter, account no. 123-4, estimated life ten years, salvage value zero; depreciation by
straight-line method. Dec. 31 Made the adjusting entry to record depreciation of office
equipment for the fiscal year. 31 Closed the Depreciation Expense, Office Equipment account
into the Income Summary account. Year 2 June 27 Bought a rug from Italy Furniture on
account, $ 1,720, account no. 123-5, estimated life eight years, salvage value zero; depreciation
by double-declining-balance method. Dec. 31 Recorded the adjusting entry for depreciation of
office equipment for the fiscal year. 31 Closed the Depreciation Expense, Office Equipment
account into the Income Summary account. Year 3 June 23 Traded in the executive desk for a
new one, which cost $ 1,330, from Persia, Inc., account no. 123-6, receiving a trade-in
allowance of $ 580 on the old desk and paying the balance in cash. Expected life of the new
desk is eight years with a zero salvage value; depreciated using straight-line method. Made the
entry to depreciate the old desk to date. Made the entry to record the exchange of assets,
assuming that the exchange has commercial substance. Dec. 31 Made the adjusting entry to
record depreciation of office equipment for the fiscal year. 31 Closed the Depreciation Expense,
Office Equipment and Loss on Disposal of Property and Equipment accounts into the Income
Summary account. Required 1. Record the transactions in general journal form, pages 136 and
137. 2. With the purchase of each new asset, open an account in the subsidiary ledger. 3. After
each entry, post to the two controlling accounts and to the subsidiary ledger. 4. Make a list of
the balances in the subsidiary ledger accounts at the end of Year 3 and compare the totals with
the balances of the two controlling accounts.View Solution: The general ledger of Rafferty
Insurance Agency includes controlling accounts
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