Tower Company owned a service truck that was purchased at the beginning of 2016 for $31,000. It

Question:

Tower Company owned a service truck that was purchased at the beginning of 2016 for $31,000.

It had an estimated life of three years and an estimated salvage value of $4,000. Tower Company uses straight-line depreciation. Its financial condition as of January 1, 2018, is shown in the following financial statements model:

In 2018, Tower Company spent the following amounts on the truck:
Jan. 4 ...Overhauled the engine for $6,000. The estimated life was extended one additional year, and the salvage value was revised to $3,000.
July 6 ...Obtained oil change and transmission service, $250.
Aug. 7 ...Replaced the fan belt and battery, $350.
Dec. 31 ....Purchased gasoline for the year, $7,500.
31 .....Recognized 2018 depreciation expense.
Required
a. Record the 2018 transactions in a statements model like the preceding one.
b. Prepare journal entries for the 2018 transactions.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...