Foley Word Processing Service uses the straight-line method of depreciation. The company's fiscal year end is December 31. The following transactions and events occurred during the first three years.

2020 July 1 Purchased a computer from the Computer Center for $1,900 cash plus sales tax of $150, and shipping costs of $50.

Nov. 3 Incurred ordinary repairs on computer of $140.

Dec. 31 Recorded 2020 depreciation on the basis of a four-year life and estimated salvage value of $500.

2021 Dec. 31 Recorded 2021 depreciation.

2022 Jan. 1 Paid $300 for an upgrade of the computer. This expenditure is expected to increase the operating efficiency and capacity of the computer.

Dec. 31 The computer (assuming same salvage value and useful life) with book value of $1,325 was sold for $1,025 cash.

Instructions

Prepare the necessary entries. (Show computations.)