In your audit of the financial statements of Scotia Corporation at December 31, 19X1, you observe the contents of certain accounts and other pertinent information as follows:

You learn that on June 15 the company's old high-pressure boiler exploded. Damage to the building was insignificant, but the boiler was replaced by a more efficient oil-burning boiler. The company received $2,000 as an insurance adjustment under terms of its policy for damage to the boiler. The disbursement voucher charged to the building account on July 1, 19X1 is shown below:

In vouching the expenditure, you determine that the terms included a 2 percent cash discount, which was properly computed and taken. The sales tax is not subject to discount. Your audit discloses that a voucher for $1,000 was paid to Tourmaline Company, on July 2, 19X1, and charged to the repair expense account. The voucher is adequately supported and is marked "installation costs for new oil-burning boiler." The company's fuel oil supplier advises the fuel oil had a market price of 16 cents per gallon on July 1 and 18 cents per gallon on December 31. The fuel oil inventory at December 31 was 2,000 gallons. A review of subsidiary property records discloses that the replaced coal-burning boiler was installed when the building was constructed and was recorded at a cost of $10,000. According to the manufacturers of the new boiler, it should be serviceable for 15 years. In computing depreciation for retirements, Scotia Corporation consistently treats a fraction of a month as a full month. Prepare the adjusting journal entries that you would suggest for entry on Scotia's books. The books have not been closed. Support your entries with computations in good form.

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Date 12/31/X0 7/1/X1 9/1/X1 Explanation Balance New boiler Insurance recovery Building LF 48 CD CR $100,000 Debit Credit Balance $100,000 16,480 $1,480 115,000 2,000 113,000