Problem 10-4B Computing and revising depreciation; revenue and capital expenditures

Mercury Delivery Service completed the following transactions involving equipment.

Year 1
Jan.	1	Paid $25,860 cash plus $1,810 in sales tax for a new delivery van that was estimated to have a five-year life and a $3,670 salvage value. Van costs are recorded in the Equipment account.
	3	Paid $1,850 to install sorting racks in the van for more accurate and quicker delivery of packages. This increases the estimated salvage value of the van by another $230.
Dec.	31	Recorded annual straight-line depreciation on the van.
Year 2
Jan.	1	Paid $2,064 to overhaul the vans engine, which increased the vans useful life by two years.
May	10	Paid $800 for minor repairs to the van after the driver backed it into a loading dock.
Dec.	31	Recorded annual straight-line depreciation on the van.

Check Dec. 31, Year 1: Dr. Depr. ExpenseEquip., $5,124

Dec. 31, Year 2: Dr. Depr. ExpenseEquip., $3,760

Required

Prepare journal entries to record these transactions and events.