Problem $6-32$A $($Algo$)$ Accounting for continuing expenditures LO $6-2,6-7$

Tower Company owned a service truck that was purchased at the beginning of Year $1$ for $$49,000.$ It had an estimated life of three years and an estimated salvage value of $$4,000.$ Tower company uses straight$-$line depreciation. Its financial condition as of January $1,$ Year $3,$ is shown on the first line of the horizontal statements model.

In Year $3,$ Tower Company spent the following amounts on the truck:

Jan.

$4$

Overhauled the engine for $$7,800.$ The estimated life was extended one additional year, and the salvage value was revised to $$3,000.$

July

$6$

Obtained oil change and transmission service, $$430.$

Aug.

$7$

Replaced the fan belt and battery, $$530.$

Dec.

$31$

Purchased gasoline for the year, $$9,300.$

$31$

Recognized Year $3$ depreciation expense