Required:

1. Record the transactions in the general journal, indicating whether each transaction amount should be capitalized as an asset or expensed. Round all calculations to the nearest dollar.

Assume that Luxury Limousines completed the following transaction:

2013

Jan. 5 Paid $40,000 cash for a used limousine

Jan 6 Paid $4000 to have the engine overhauled

Jan 9 Paid $1500 to have the company logo put on the limousine

Jun 15 Paid $600 for a minor tune-up after limousine was put into use

Dec 31 Recorded amortization on the limousine by the DDB method. (Assume a 5-year life).

2014

Mar 9 Traded in the limousine for a new limousine costing $75,000. The dealer granted a $25,000 allowance on the old limousine, and the company paid the balance in cash. Recorded year 2014 amortization for the year to date and then recorded the exchange of the limousines. This transaction has commercial substance.

Aug 9 Repaired the new limousines damaged fender for $2500 cash

Dec 31 Recorded amortization on the new limousine by the DDB method. Assume an eight-year life and a residual value of $20,000

Luxury Limousines amortization policy states that the company will take full months amortization on purchases occurring up to and on the 15^th day of the month and will not take any amortization for the month if the purchase occurs after the 15^th day of the month.