Question

Tower Company owned a service truck that was purchased at the beginning of 2018 for $46.000. 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, 2020, is shown in the following financial statements model. Assets Revenue Expense Net Income Cash Flow Cash 34,800 Machine 46,800 Equity Retained = Common Stock + Earnings 17,880 35,880 Accumulated Depreciation 28,000 NA NA NA NA In 2020, Tower Company spent the following amounts on the truck: Jan. 4 Overhauled the engine for $7,488. The estimated life was extended one additional year, and the salvage value was revised to $3,680. July 6 Obtained oil change and transmission service, $390. Aug. 7 Replaced the fan belt and battery, $490. Dec. 31 Purchased gasoline for the year, $8,900. 31 Recognized 2020 depreciation expense.

Answer 1

Record the 2020 transactions in a statements model like the preceeding one? Answer: + + TOWER COMPANY Statements Model for 2020 Assets Stockholders' Equity Revenue - Expense = Net Income Cash Flow Accumulated Retained Date Cash Machine Depreciation = Common Stock + Earnings Balance $ 34,000.00 $ 46,000.00 $ 28,000.00 = $ 17,000.00 $ 35,000.00 1/4 $ -7,400.00 + $ 7,400.00 $ $ $ $ $ $ -7,400.00 IA 7/6 $ -390.00 + $ $ $ $ -390.00 $ $ 390.00 = $ -390.00 $ -390.00 OA 8/7 $ -490.00 $ $ $ $ -490.00 $ $ 490.00 = $ -490.00 $ -490.00 OA 12/31 $ -8,900.00 + $ $ = $ $ -8,900.00 $ $ 8,900.00 - $ -8,900.00 $ -8,900.00 OA 12/31 $ $ $ 11,200.00 = $ $ -11,200.00 $ $ 11,200.00 - $ -11,200.00 $ NC Total $ 16,820.00 + $53,400.00 $39,200.00 - $ 17,000.00 + $ 14,020.00 $ $ 20,980.00 $ -20,980.00 $-17,180.00 Depreciation = (Cost+Improvement-Revised Salvage Value-Accumulated Depreciation)/Remainning Useful Life Depreciation = (46,000+7,400-3,000-28,000)/2 = $ 11,200 + = + + + If you need any further explanation, kindly request in the comment section, glad to be helpful.