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Record the Year 3 transactions in a statements model. (

Record the Year 3 transactions in a statements model. (

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Dd.37.

Tower Company owned a service truck that was purchased at the beginning of Year 1 for $45,000lt had an estimated life of three years and an estimated salvage value of $6,000. Tower company uses straight-line depreciationits financial condition as of January 1, Year 3, is shown on the first line of the horizontal statements model. Year 3, Tower Company spent the following amounts on the truck: Jan. 4 Overhauled the engine for $7,300. 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, $380. Aug. 7 Replaced the fan belt and battery, 480. Dec.31 Purchased gasoline for the year, $8,800. 31 Recognized Year 3 depreciation expense. Required a. Record the Year 3 transactions in a statements model. (In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA)a financing activity (FA), or net change in cash (NC)leave the cell blank if the Statement of Cash Flows is not affected. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry .)
Transcribed Image Text:Tower Company owned a service truck that was purchased at the beginning of Year 1 for $45,000lt had an estimated life of three years and an estimated salvage value of $6,000. Tower company uses straight-line depreciationits financial condition as of January 1, Year 3, is shown on the first line of the horizontal statements model. Year 3, Tower Company spent the following amounts on the truck: Jan. 4 Overhauled the engine for $7,300. 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, $380. Aug. 7 Replaced the fan belt and battery, 480. Dec.31 Purchased gasoline for the year, $8,800. 31 Recognized Year 3 depreciation expense. Required a. Record the Year 3 transactions in a statements model. (In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA)a financing activity (FA), or net change in cash (NC)leave the cell blank if the Statement of Cash Flows is not affected. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry .)
Date Balance 1/4 7/6 8/7 12/31 12/31 Total Assets Cash +BV Truck 33,000+ 33,000+ Balance Sheet 19,000 = TOWER COMPANY Horizontal Statements Model for Year 3. 19,000 Stockholders' Equity Common Stock 18,000 + ++ 18,000 + Retained Revenue Earnings 34,000 ~ B ME 34,000 0 Income Statement TULED Expense " ### Net Income. 0 Statement of Cash Flow 0
Transcribed Image Text:Date Balance 1/4 7/6 8/7 12/31 12/31 Total Assets Cash +BV Truck 33,000+ 33,000+ Balance Sheet 19,000 = TOWER COMPANY Horizontal Statements Model for Year 3. 19,000 Stockholders' Equity Common Stock 18,000 + ++ 18,000 + Retained Revenue Earnings 34,000 ~ B ME 34,000 0 Income Statement TULED Expense " ### Net Income. 0 Statement of Cash Flow 0
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