Question

Champion Contractors completed the following transactions andevents involving the purchase and operation of equipment in itsbusiness.

 

 

2014

Jan.

1

Paid $287,600 cash plus $11,500 in sales tax and $1,500 intransportation (FOB shipping point) for a new loader. The loader isestimated 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 enclose the cab and install air-conditioning inthe loader to enable operations under harsher conditions. Thisincreased the estimated salvage value of the loader by another$1,400.

Dec.

31

Recorded annual straight-linedepreciation on the loader.

 

 

 

     

 

2015

Jan.

1

Paid $5,400 to overhaul the loader’s engine, which increased theloader’s estimated useful life by two years.

Feb.

17

Paid $820 to repair the loaderafter the operator backed it into a tree.

Dec.

31

Recorded annual straight-linedepreciation on the loader.

 

 

 

     

 

Required:

Prepare journal entries to record these transactions andevents.