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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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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 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 S1, 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
Transcribed Image Text: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 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 S1, 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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