Mercury Delivery Service completed the following transactions involving equipment. Year 1 Jan. 1 Paid $25,860 cash plus $1,810 in sales tax for a new delivery van that was estimated to have a five-year life and a $3,670 salvage value. Van costs are recorded in the Equipment account. 3 Paid $1,850 to install sorting racks in the van for more accurate and quicker delivery of packages. This increases the estimated salvage value of the van by another $230. Dec. 31 Recorded annual straight-line depreciation on the van. Year 2 Jan. 1 Paid $2,064 to overhaul the van’s engine, which increased the van’s useful life by two years. May 10 Paid $800 for minor repairs to the van after the driver backed it into a loading dock. Dec. 31 Recorded annual straight-line depreciation on the van. Required Prepare journal entries to record these transactions and events.
Mercury Delivery Service completed the following transactions involving equipment.
Year 1
Jan. 1 Paid $25,860 cash plus $1,810 in sales tax for a new delivery van that was estimated to have a
five-year life and a $3,670 salvage value. Van costs are recorded in the Equipment account.
3 Paid $1,850 to install sorting racks in the van for more accurate and quicker delivery of packages.
This increases the estimated salvage value of the van by another $230.
Dec. 31 Recorded annual straight-line
Year 2
Jan. 1 Paid $2,064 to overhaul the van’s engine, which increased the van’s useful life by two years.
May 10 Paid $800 for minor repairs to the van after the driver backed it into a loading dock.
Dec. 31 Recorded annual straight-line depreciation on the van.
Required
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