On January 1, 2011, Quick Stop, a convenience store, purchased a new soft-drink cooler. Quick Stop paid $25,780 cash for the cooler. Quick Stop also paid $1,090 to have the cooler shipped to its location. After the new cooler arrived, Quick Stop paid $1,810 to have the old cooler dismantled and removed. Quick Stop also paid $820 to a contractor to have new wiring and drains installed for the new cooler. Quick Stop estimated that the cooler would have a useful life of six years and a residual value of $700. Quick Stop uses the straight-line method of depreciation.
1. Prepare any necessary journal entries to record the cost of the cooler.
2. Prepare the adjusting entry to record 2011 depreciation expense on the new cooler.
3. What is the book value of the cooler at the end of 2011?
4. If Quick Stop had used a useful life of 10 years and a residual value of $1,500, how would this effect depreciation expense for 2011 and the book value of the cooler at the end of 2011?