Champion Contractors completed the following transactions involving equipment. Year 1 January 1 Paid S 270,000 cash plus $10, 800 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 $27,000 salvage value. Loader costs are recorded in the Equipment account. January 3 Paid $7,000 to 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. December 31 Recorded annual straight-line depreciation on the loader. Year 2 January 1 Paid $4,500 to overhaul the loaders engine, which increased the loaders estimated useful life by two years. February 17 Paid $1,125 for minor repairs to the loader after the operator backed it into a tree. December 31 Recorded annual straight-line depreciation on the loader. Required: Prepare journal entries to record these transactions and events.v

Champion Contractors completed the following transactions involving equipment. Year 1 January 1 Paid S 270,000 cash plus $10, 800 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 $27,000 salvage value. Loader costs are recorded in the Equipment account. January 3 Paid $7,000 to 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. December 31 Recorded annual straight-line depreciation on the loader. Year 2 January 1 Paid $4,500 to overhaul the loaders engine, which increased the loaders estimated useful life by two years. February 17 Paid $1,125 for minor repairs to the loader after the operator backed it into a tree. December 31 Recorded annual straight-line depreciation on the loader. Required: Prepare journal entries to record these transactions and events.v

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Description: Champion Contractors completed the following transactions involving equipment. Year 1 January 1 Paid $270,000 cash plus $10, 800 in sales tax and $2,000 in transportation (FOB shipping point) for a newloader. The loader is estimated to have a four-y

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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Year 1 Jan. 1 Paid $287,600 cash plus $11,500 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 $20,600 salvage value. Loader costs are recorded in the Equipment account. Jan. 3 Paid $4,800 to install air-conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,400. Dec. 31 Recorded annual straight-line depreciation on the loader. Year 2 Jan. 1 Paid $5,400 to overhaul the loader’s engine, which increased the loader’s estimated useful life by two years. Feb. 17 Paid $820 for minor repairs to 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. *Debt Equipment
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