Matt’s Ski Shop is in the process of acquiring a vehicle for the business. The following transactions took place in December, 2000:
1. Verbally agreed to purchase a used car from Slee-Z-Auto for $3,500.
2. Paid $400 for a warranty on the used car.
3. Took the car on a test drive, found it faulty, and told the salesperson to deliver a different car.
4. The sales manager kindly transferred the warranty to the second vehicle.
5. Paid $7,500 for the vehicle, which has a useful life of five years, and no salvage value.
6. Paid license and taxes of $475.
7. Bought new tires for $550.
8. On a cold winter morning, the car failed to start.
9. Purchased a new battery for $85.
10. Filed a warranty claim for the new battery.
11. Received $65 payment under the warranty.

Required
a. Prepare the journal entries to record these transactions.
b. Prepare any necessary adjusting entries.
c. Post all journal entries to T-accounts.

Answer rating: 100% (QA)

a Journal Entries Verbally agreed to purchase a used car from SleeZAuto for 3500 Debit Vehicle Purchase 3500 Credit Accounts Payable 3500 Paid 400 for ... View the full answer