Assume that Luxury Limousines completed the following transactions:
2016
Jan. 5 Paid $40,000 cash for a used limousine.
6 Paid $4,000 to have the engine overhauled.
9 Paid $1,500 to repair damage to the limousine as it sat in the parking lot.
Jun. 15 Paid $600 for a minor tune-up after the limousine was put into use.
Dec. 31 Recorded amortization on the limousine by the DDB method. (Assume a five-year life.)
2017
Mar. 9 Traded in the limousine for a new limousine costing $75,000. The dealer granted a $25,000 allowance on the old limousine, and the company paid the balance in cash. Recorded year 2017 amortization for the year to date and then recorded the exchange of the limousines. This transaction has commercial substance.
Aug. 9 Repaired the new limousine's damaged fender for $2,500 cash.
Dec. 31 Recorded amortization on the new limousine by the DDB method. (Assume an eight-year life and a residual value of $20,000.)
Luxury Limousines ' amortization policy states that the company will take a full month's amortization on purchases occurring up to and on the 15th day of the month and will not take any amortization for the month if the purchase occurs after the 15th day of the month.
Required
Record the transactions in the general journal, indicating whether each transaction amount should be capitalized as an asset or expensed. Round all calculations to the nearest dollar.