Question

Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2022, for $12,000. They expect to use the Suburban for five years and then sell the vehicle for $4,500. The following expenditures related to the vehicle were also made on July 1, 2022: The company pays $1,800 to GEICO for a one-year insurance policy. The company spends an extra $3,000 to repaint the vehicle, placing the Great Adventures logo on the front hood, back, and both sides. An additional $2,000 is spent on a deluxe roof rack and a trailer hitch. The painting, roof rack, and hitch are all expected to increase the future benefits of the vehicle for Great Adventures. In addition, on October 22, 2022, the company pays $400 for basic vehicle maintenance related to changing the oil, replacing the windshield wipers, rotating the tires, and inserting a new air filter.

Record the closing entry for revenue accounts.

Record the closing entry for expense accounts.

Record the depreciation for vehicle purchased. Use straight-line depreciation.

Record the expenditure related to vehicle maintenance on October 22, 2022.

Record the expenditures related to the vehicle on July 1, 2022. Note: The capitalized cost of the vehicle is recorded in the Equipment account.

Answer 1

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Tony and Suzie
I cannot see any revenue transaction. So not posting any revenue entry.
Calculation of cost of vehicle:
Particulars	Amount $
Purchase price	12,000.00
Repainting vehicle	3,000.00	Both oft these will be capitalized because its mentioned that The painting, roof rack, and hitch are all expected to increase the future benefits of the vehicle
Deluxe roof rack and a trailer hitch	2,000.00
Total cost of vehicle:	17,000.00	A
Salvage value	4,500.00	B
Depreciable value	12,500.00	C=A-B
Life (years)	5.00	D
Annual Depreciation	2,500.00	E=C/D
Vehicle purchased on July 1. I am assuming calendar year.
Depreciation for July to December (months)	6.00	F
Depreciation for July to December ($)	1,250.00	G=E/12*F
Account	Debit $	Credit $
Record the expenditure related to vehicle maintenance on October 22, 2022.
Vehicle maintenance	400.00
Cash		400.00
Record the expenditures related to the vehicle on July 1, 2022.
Equipment account	12,000.00
Cash		12,000.00
(for vehicle purchase)
Insurance Expense	1,800.00
Cash		1,800.00
(for Insurance Expense)
Equipment account	3,000.00
Cash		3,000.00
(for Repainting vehicle)
Equipment account	2,000.00
Cash		2,000.00
(for Deluxe roof rack and a trailer hitch)