Champion Contractors completed the following transactions and events involving t
ID: 2563866 • Letter: C
Question
Champion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business 2016 an 1 Paid $258,00 cash plus $10,320 in sales tax and $1,800 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $25,800 salvage value. Loader costs are recorded in the Equipment account an 3 Paid $3,00 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 $900. Dec. 31 Recorded annual straight-line depreciation on the loader 2017 an. 1 Paid $4,400 to overhaul the loader's engine, which increased the loader's estimated useful life by two years Feb. 17 Paid $1,100 to repair the loader after the operator backed it into a tree Dec. 31 Recorded annual straight-line depreciation on the loader Required: Prepare journal entries to record these transactions and events.Explanation / Answer
Answer:
Date
General Journal
Debit
Credit
1-Jan-14
Equipment
270,120
Cash
270,120
(258000+10320+1800)
(To record the purchase of equipment)
3-Jan-14
Equipment
3,000
Cash
3,000
( to record the cab and install air-conditioning charges)
31-Dec-14
Depreciation expense—Equipment
61,605
Accumulated depreciation—Equipment
61,605
(270120+3000-25800-900)
=246420/4
=
1-Jan-15
Equipment
4,400
Cash
4,400
(To record the overhaul for equipment)
17-Feb-15
Repairs expense—Equipment
1100
Cash
1100
(To record the repair expanses)
31-Dec-15
Depreciation expense—Equipment
37,843
Accumulated depreciation—Equipment
37,843
(270120+3000+400)- (25800-900-61605)
=189215/(3+2)
=189215/5
=37843
Date
General Journal
Debit
Credit
1-Jan-14
Equipment
270,120
Cash
270,120
(258000+10320+1800)
(To record the purchase of equipment)
3-Jan-14
Equipment
3,000
Cash
3,000
( to record the cab and install air-conditioning charges)
31-Dec-14
Depreciation expense—Equipment
61,605
Accumulated depreciation—Equipment
61,605
(270120+3000-25800-900)
=246420/4
=
1-Jan-15
Equipment
4,400
Cash
4,400
(To record the overhaul for equipment)
17-Feb-15
Repairs expense—Equipment
1100
Cash
1100
(To record the repair expanses)
31-Dec-15
Depreciation expense—Equipment
37,843
Accumulated depreciation—Equipment
37,843
(270120+3000+400)- (25800-900-61605)
=189215/(3+2)
=189215/5
=37843
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