Year 1

Jan.		1		Paid $290,000 cash plus $11,600 in sales tax and $1,700 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $29,000 salvage value. Loader costs are recorded in the Equipment account.
Jan.		3		Paid $6,000 to install air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,800.
Dec.		31		Recorded annual straight-line depreciation on the loader.

Year 2

Jan.		1		Paid $4,300 to overhaul the loaders engine, which increased the loaders estimated useful life by two years.
Feb.		17		Paid $1,075 for minor repairs to the loader after the operator backed it into a tree.
Dec.		31		Recorded annual straight-line depreciation on the loader.

Journal entry worksheet