Question
Champion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business. 2014 Jan. 1 Paid $287,600 cash plus
Champion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business.
2014
Jan. 1 Paid $287,600 cash plus $11,500 in sales tax and $1,500 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $20,600 salvage value. Loader costs are recorded in the equipment account.
Jan. 3 Paid $4,800 to enclose the cab and install air-conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,400.
Dec. 31 Recorded annual straight-line depreciation on the loader.
2015
Jan. 1 Paid $5,400 to overhaul the loader's engine, which increased the loader's estimated useful life by two years.
Feb. 17 Paid $820 to repair the loader after the operator backed it into a tree.
Dec. 31 Recorded annual straight-line depreciation on the loader.
Prepare journal entries to record these transactions and events.
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
The following journal entries should be recorded for the given transactions and events Date Account ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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