Problem 8-33A

LO 8-2, 8-8 Problem 8-33A Continuing expenditures with statements model Tower Company owned a service truck that was purchased at the beginning of Year 1 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. Year 3, is shown in the following financial statements model: CHECK FIGURE b. Depreciation Expense: $8,000 Assets Equity Rev. Exp. Net Inc. Cash Flow Cash + Book Value of Truck Com. Stk. + Ret. Earn. 20,000 + 9,000 + 13,000 24,000 NA NA NA NA Overhauled the engine for $6,000. The estimated life was extended one additional cut, ut 458 Chapter 8 In Year 3, Tower Company spent the following amounts on the truck: Jan. 4 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. Dec. 31 Recognized Year 3 depreciation expense. Required a. Record the Year 3 transactions in a statements model like the preceding one. b. Prepare journal entries for the Year 3 transactions