Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2025, for $12,800. They expect to use the Suburban for five years and then sell the vehicle for $4,900. The following expenditures related to the vehicle were also made on July 1, 2025: - The company pays $2,000 to GEICO for a one-year insurance policy. - The compony spends an extra $3,800 to repaint the vehicle, placing the Great Adventures logo on the front hood, back, and both sides. - An additional $2,200 is spent on a deluxe roof rack and a trailer hitch. The painting, roof rack, and hitch are all expected to increase the future benefits of the vehicle for Great Adventures. In addition, on October 22,2025 , the company pays $800 for basic vehicle maintenance related to changing the oil, replacing the windshield wipers; rotating the tires, and inserting a new air filter. 1 Record the expenditures related to the vehicle on July 1 , 2025. Note: The capitalized cost of the vehicle is recorded in the Equipment account. 2 Record the expenditure related to vehicle maintenance on October 22, 2025. 3 Record the depreciation for vehicle purchased. Use straight-line depreciation. 4 Record the expiration of prepaid insurance. 5 Record the closing entry for revenue accounts. 6 Record the closing entry for expense accounts. Additional interest for five months needs to be accrued on the $31,800,6% note payable obtained on August 1,2024 . Recall that annual interest is paid each July 31 . Record the adjusting entry. Assume that $11,800 of the $31,800 note discussed above is due next year. Record the entry to reclassify the current portion of the long-term note. By the end of the year, $20,000 in gift cards have been redeemed. The company had sold gift cards of $26,800 during the year and recorded those as Deferred Revenue. Record the adjusting entry. Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The company believes the likelihood of payment occurring is probable, and the estimated amount to be paid is $13,800. Record the adjusting entry. For sales of MU watches, Great Adventures offers a warranty against defect for one year. At the end of the year, the company estimates future warranty costs to be $5,800. Record the adjusting entry. Record the closing entry for revenue accounts. Record the closing entry for expense and loss accounts

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of External Auditing

Authors: Brenda Porter, David Hatherly, Jon Simon

3rd Edition

0470018259, 9780470018255

More Books

Students also viewed these Accounting questions

Question

What is a key public for this product/service/concept?

Answered: 1 week ago