Champion Contractors completed the following transactions andevents involving the purchase and operation of equipment in itsbusiness.
2016
Jan. 1 Paid $306,000 cash plus $12,240 insales tax and $1,900 in transportation (FOB shipping point) for anew loader. The loader is estimated to have a four-year life and a$30,600 salvage value. Loader costs are recorded in the Equipmentaccount. Jan. 3 Paid $7,000 to enclose the cab andinstall air conditioning in the loader to enable operations underharsher conditions. This increased the estimated salvage value ofthe loader by another $2,100. Dec. 31 Recorded annual straight-linedepreciation on the loader.
2017
Jan. 1 Paid $4,300 to overhaul theloaderâs engine, which increased the loaderâs estimated useful lifeby two years. Feb. 17 Paid $1,075 to repair the loaderafter the operator backed it into a tree. Dec. 31 Recorded annual straight-linedepreciation on the loader.
Required:
Prepare journal entries to record these transactions andevents.
Champion Contractors completed the following transactions andevents involving the purchase and operation of equipment in itsbusiness.
2016
| Jan. | 1 | Paid $306,000 cash plus $12,240 insales tax and $1,900 in transportation (FOB shipping point) for anew loader. The loader is estimated to have a four-year life and a$30,600 salvage value. Loader costs are recorded in the Equipmentaccount. | ||
| Jan. | 3 | Paid $7,000 to enclose the cab andinstall air conditioning in the loader to enable operations underharsher conditions. This increased the estimated salvage value ofthe loader by another $2,100. | ||
| Dec. | 31 | Recorded annual straight-linedepreciation on the loader. |
2017
| Jan. | 1 | Paid $4,300 to overhaul theloaderâs engine, which increased the loaderâs estimated useful lifeby two years. | ||
| Feb. | 17 | Paid $1,075 to repair the loaderafter the operator backed it into a tree. | ||
| Dec. | 31 | Recorded annual straight-linedepreciation on the loader. |
Required:
Prepare journal entries to record these transactions andevents.
Related questions
Problem 10-4A Computing and revising depreciation; revenue and capital expenditures LO C1, C2, C3
Champion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business.
2016
| Jan. | 1 | Paid $298,000 cash plus $11,920 in sales tax and $1,500 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $29,800 salvage value. Loader costs are recorded in the Equipment account. | ||
| Jan. | 3 | Paid $5,000 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 $1,500. | ||
| Dec. | 31 | Recorded annual straight-line depreciation on the loader. |
2017
| Jan. | 1 | Paid $4,300 to overhaul the loaderâs engine, which increased the loaderâs estimated useful life by two years. | ||
| Feb. | 17 | Paid $1,075 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.
*These are the options for the general journal
Accumulated amortization
Accumulated depletion
Accumulated depreciationâEquipment
Amortization expense
Building
Cash
Depletion expense
Depreciation expenseâEquipment
Equipment
Gain on sale of equipment
Goodwill
Impairment loss
Land
Land improvements
Leasehold improvements
Loss from fire
Loss on disposal of equipment
Loss on exchange of assets
Loss on sale of equipment
Mineral deposit
Ore mine
Prepaid rent
Rent expense
Repairs expenseâEquipment
