Revised question
.wer Company owned a service truck that was purchased at the beginning of Year 1 for $44,000. It had an estimated life of three zars and an estimated salvage value of $5,000. Tower company uses straight-line depreciation. Its nancial condition as of January 1, :ar 3, is shown on the rst line of the horizontal statements model. Year 3. Tower Company spent the following amounts on the truck: n. 4 Gverhauled the engine for $7,266. The estimated life was extended one additional year, and the salvage value was revised to $4,660. 1y 6 Obtained oil change and transmission service, $3?B. g. ? Replaced the fan belt and battery, $4?B. c.31 Purchased gasoline for the year, $8,?BB. 31 Recognized Year 3 depreciation expense. aquired Record the "r'ear 3 transactions in a statements model. {In the Cash Flow column, indicate whether the item is an operating activity {0A}, an investing activity {IA}. a nancing activity {FA}, or net change in cash {NC}; leave the cell blank if the Statement of Cash Flows is not affected. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entryJ Tower Company owned a service truck that was purchased at the beginning of Year 1 for $44,000. It had an estimated life of three years and an estimated salvage value of $5,000. Tower company uses straight-line depreciation. Its financial condition as of January 1, Year 3, is shown on the first line of the horizontal statements model. In Year 3, Tower Company spent the following amounts on the truck: Jan. 4 Overhauled the engine for $7, 200. The estimated life was extended one additional year, and the salvage value was revised to $4, 000. July 6 Obtained oil change and transmission service, $370. Aug. 7 Replaced the fan belt and battery, $470. Dec. 31 Purchased gasoline for the year, $8,700. 31 Recognized Year 3 depreciation expense. Required a. Record the Year 3 transactions in a statements model. (In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA), or net change in cash (NC); leave the cell blank if the Statement of Cash Flows is not affected. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry.) TOWER COMPANY Horizontal Statements Model for Year 3 Balance Sheet Income Statement Assets Stockholders' Equity Statement of Common Retained Revenue Expense Net Income Cash Flow Date Cash BV Truck Stock Earnings Balance 32,000 + 18,000 = 16,000 + 34,000 1/4 716 8/7 + + + + + 2/31 12/31 Total +
