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Champion Contractors completed the following transactions involving equipment. Year 1 January 1 Paid $270,000 cash plus $10,800 in sales tax and $1,600 in transportation (FOB
Champion Contractors completed the following transactions involving equipment. Year 1
January 1 | Paid $270,000 cash plus $10,800 in sales tax and $1,600 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $27,000 salvage value. Loader costs are recorded in the Equipment account. |
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January 3 | Paid $3,000 to install air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $900. |
December 31 | Recorded annual straight-line depreciation on the loader. |
Year 2
January 1 | Paid $4,200 to overhaul the loaders engine, which increased the loaders estimated useful life by two years. |
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February 17 | Paid $1,050 for minor repairs to the loader after the operator backed it into a tree. |
December 31 | Recorded annual straight-line depreciation on the loader. |
Required: Prepare journal entries to record these transactions and events.
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