Prepare journal entries to record these transactions and events. Champion Contra
ID: 2585938 • Letter: P
Question
Prepare journal entries to record these transactions and events.
Champion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business.
Paid $282,000 cash plus $11,280 in sales tax and $2,000 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $28,200 salvage value. Loader costs are recorded in the Equipment account.
Paid $7,000 to enclose the cab and install air-conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $2,100.
Paid $4,800 to overhaul the loader’s engine, which increased the loader’s estimated useful life by two years.
Required:Prepare journal entries to record these transactions and events.
Champion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business.
2014 Jan. 1Paid $282,000 cash plus $11,280 in sales tax and $2,000 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $28,200 salvage value. Loader costs are recorded in the Equipment account.
Jan. 3Paid $7,000 to enclose the cab and install air-conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $2,100.
Dec. 31 Recorded annual straight-line depreciation on the loader. 2015 Jan. 1Paid $4,800 to overhaul the loader’s engine, which increased the loader’s estimated useful life by two years.
Feb. 17 Paid $1,200 to repair the loader after the operator backed it into a tree. Dec. 31 Recorded annual straight-line depreciation on the loader.Explanation / Answer
1-Jan Loader 295280 Cash 295280 3-Jan Loader 7000 Cash 7000 31-Dec Dep 67995 Loader 67995 1-Jan-15 Loader 4800 Cash 4800 17-Feb-15 Repairs 1200 Cash 1200 31-Dec-15 Dep 47817 Loader 47817