Question

Tower Company owned a service truck that was purchased at the beginning of 2016 for $31,000.
It had an estimated life of three years and an estimated salvage value of $4,000. Tower Company uses straight-line depreciation. Its financial condition as of January 1, 2018, is shown in the following financial statements model:
In 2018, Tower Company spent the following amounts on the truck:
Jan. 4 ... Overhauled the engine for $6,000. The estimated life was extended one additional year, and the salvage value was revised to $3,000.
July 6 ... Obtained oil change and transmission service, $250.
Aug. 7 ... Replaced the fan belt and battery, $350.
Dec. 31 .... Purchased gasoline for the year, $7,500.
31 ..... Recognized 2018 depreciation expense.
Required
a. Record the 2018 transactions in a statements model like the preceding one.
b. Prepare journal entries for the 2018 transactions.


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  • CreatedApril 20, 2015
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