Question

Required information The following information applies to the questions displayed below) 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 $15,000 They expect to use the Suburban for five years and then sell the vehicle for $6,000. The following expenditures related to the vehicle were also made on July 1, 2022 The company pays $2.550 to GEICO for a one year insurance policy The company spends an extra $6,000 to repaint the vehicle, placing the Great Adventures logo on the front hood, An additional $2,750 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 $1,900 for basic vehicle maintenance related to changing the oil replacing the windshield wipers, rotating the tires, and inserting a new air filter 4. Record the depreciation expense and any other adjustments related to the vehicle on December 31, 2022.gif no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) View transaction list Journal entry worksheet 2 > Record the depreciation expense for the vehicle Noter before credits Date General Journal Debit Credit Dec 31, 2022 Recorder Clear entry View general Journal < Prev 10 oogle Chrome Features Extensions Enterprise

Answer 1

Answer

Date	General Jouranl	Debit	Credit
Dec 31 2022	Depreciation expense	$1,775
	Accumulated Depreciation-Vehicle		$1,775
	(To record depreciation)

Cost of vehicle=Cost paid+Amount spend to repaint+Amount spend on deluxe roof rack

=$15,000+$6,000+$2,750

Cost of vehicle=$23,750

Note: Amonut spend on insurance is not capiitalised and is charge to P&L as it is not inevitable to bring asset to its condition to use and also not generate future beneifts.

Also amount spent on repair is charged to P&L.

Depreciation is charged for 6 months from 1 July to 31 Decemeber

Depreciation expense=(Cost of vehicle-Slavage value)/Useful life*(6/12)

=(23,750-6,000)/5*6/12

=17,750/5*6/12

Depreciation expense=$1,775

Note: no other adjustment required on Dec 31 related to vehicle