ower Company owned a service truck that was purchased at the beginning of 2018 for $48,000. It had an estimated life of three ears and an estimated salvage value of $6,000. Tower company uses straight-line depreciation. Its financial condition as of January 1, 020, is shown in the following financial statements model. Assets Equity Revenue Expense Net Income Cash Flow %3D Accumulated Retained Depreciation 28,000 Cash Machine Common Stock + Earnings 42,000 37,000 48,000 15,000 NA NA NA NA + n 2020, Tower Company spent the following amounts on the truck: an. 4 Overhauled the engine for $7,700. The estimated life was extended one additional year, and the salvage value was revised to $5,000. uly 6 Obtained oil change and transmission service, $420. ug. 7 Replaced the fan belt and battery, $520. ec.31 Purchased gasoline for the year, $9,200. 31 Recognized 2020 depreciation expense. equired . Record the 2020 transactions in a statements model like the preceding one. (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, or NC for net change. If the element is not affected, leave the cell blank. Round your answers to the nearest dollar amount. Enter any decreases to account balances with a minus sign.) TOWER COMPANY
ower Company owned a service truck that was purchased at the beginning of 2018 for $48,000. It had an estimated life of three ears and an estimated salvage value of $6,000. Tower company uses straight-line depreciation. Its financial condition as of January 1, 020, is shown in the following financial statements model. Assets Equity Revenue Expense Net Income Cash Flow %3D Accumulated Retained Depreciation 28,000 Cash Machine Common Stock + Earnings 42,000 37,000 48,000 15,000 NA NA NA NA + n 2020, Tower Company spent the following amounts on the truck: an. 4 Overhauled the engine for $7,700. The estimated life was extended one additional year, and the salvage value was revised to $5,000. uly 6 Obtained oil change and transmission service, $420. ug. 7 Replaced the fan belt and battery, $520. ec.31 Purchased gasoline for the year, $9,200. 31 Recognized 2020 depreciation expense. equired . Record the 2020 transactions in a statements model like the preceding one. (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, or NC for net change. If the element is not affected, leave the cell blank. Round your answers to the nearest dollar amount. Enter any decreases to account balances with a minus sign.) TOWER COMPANY
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Tower Company owned a service truck that was purchased at the beginning of 2018 for $48,000. It had an estimated life of three
years and an estimated salvage value of $6000. Tower company uses straight-line depreciation. Its financial condition as of January 1,
2020, is shown in the following financial statements model.
Assets
Equity
Revenue
Expense
Net Income
Cash Flow
Accumulated
Depreciation
28,000
Retained
= Common Stock
15,000
Cash
Machine
Earnings
42,000
37,000
48,000
NA
NA
NA
NA
In 2020, Tower Company spent the following amounts on the truck:
Jan. 4 Overhauled the engine for $7,700. The estimated life was extended one additional year, and the salvage value was revised to
$5,000.
July 6 Obtained oil change and transmission service, $420.
Aug. 7 Replaced the fan belt and battery, $520.
Dec.31 Purchased gasoline for the year, $9,200.
31 Recognized 2020 depreciation expense.
Required
a. Record the 2020 transactions in a statements model like the preceding one. (In the Cash Flow column, use the initials OA to
designate operating activity, IA for investing activity, FA for financing activity, or NC for net change. If the element is not
affected, leave the cell blank. Round your answers to the nearest dollar amount. Enter any decreases to account balances with
a minus sign.)
TOWER COMPANY
Statements Model for 2020
Assets
Stockholders' Equity
Revenue
Expense
Net Income
Cash Flow
Accumulated
Common
Stock
Retained
+
Date
Cash
Machine
%3D
Depreciation
Earnings
Balance
37,000 +
48,000
28,000 =
15,000 +
42,000
%3D
(7,700) A
(420) OA
1/4
(7,700)+
7,700 -
(420)
7/6
8/7
(420) +
(520) +
(420)
420 =
(520)
520
(520)
(520) OA
12/31
(9,200)
(9,200)
9,200
(9,200)
(9,200) OA
|12/31
12,850
(12,850)
12,850
(12,850)
Total
19,160 +
55,700 -
40,850 =
15,000 +
19,010
0 -
22,990 =
(22,990)
(17,840) NC
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