[The following information applies to the questions displayed below. Tony and Su

Question

[The following information applies to the questions displayed below. Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban. The cost of the Suburban is $9,600. The vehicle is purchased in late June and will be put into use on July 1, 2019. Annual insurance from GEICO runs $1,500 per year. The paint is starting to fade, so they spend an extra $2.400 to repaint the vehicle, placing the Great Adventures logo on the front hood, back, and both sides. An additional $1,400 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. They expect to use the Suburban for five years and then sell the vehicle for $3,900. 10.00 pein Required: 1. Determine the amount that should be recorded for the new vehicle References 3. Prepare a depreciation schedule using the straight-line method. of Year Amounts References Worksheet

Explanation / Answer

Answer 1. Cost of the Suburban      9,600.00 Annual Insurance                   -   Painting of Vehicle      2,400.00 Deluxe Roof Rack & a Trailer hitch      1,400.00 Total Cost of New Vehicle    13,400.00 Answer 2. Depreciation Expense per Annum = ($13,400 - $3,900) / 5 Years Depreciation Expense per Annum = $1,900 per annum Answer 3. GREAT ADVENTURES End of Year Amounts Year Depreciation Expense Accumulated Depreciation Book Value 0                         -                            -               13,400 1                     950                       950             12,450 2                  1,900                   2,850             10,550 3                  1,900                   4,750               8,650 4                  1,900                   6,650               6,750 5                  1,900                   8,550               4,850 6                     950                   9,500               3,900 Answer 4. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 30-Jun-21 Depreciation Expense       950.00    Accumulated Depreciation          950.00 (record the depreciation expense for the year) 1-Jul-21 Cash    8,200.00 Accumulated Depreciation - Equipment    3,800.00 Loss on sale of Equipment    1,400.00     Equipment    13,400.00 (record the sale of equipment)

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