Question

Champion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business. 2016 1 Paid $270,000 cash plus $10,800 in sales tax and $1,800 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $27,000 salvage value. Loader costs are recorded in the Equipment account. 3 Paid $7,000 to enclose the cab and instal1 air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $2,100. Jan. Jan. Dec. 31 Recorded annual straight-line depreciation on the loader. 2017 1 Paid $4,700 to overhaul the loader's engine, vhich increased the loader's estimated useful life by two years. Jan. Feb. 17 Paid $1,175 to repair the loader after the operator backed it into a tree. Dec. 31 Recorded annual straight-line depreciation on the loader. Required: Prepare journal entries to record these transactions and events. View transaction list Journal entry worksheet 3 2 1 4 Paid $270,000 cash plus $10,800 in sales tax and $1,800 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four- year life and a $27,000 salvage value. Loader costs are recorded in the Equipment account. Note: Enter debits before credits.

Answer 1

Champion Contractor - Record - Depreciation
Date	Account Titles and Explanation	Debit	Credit
1/1/2016	Equipment	$282,600
	Cash (270000+10800+1800)		$282,600
	To record costs paid for equipment
3/1/2016	Equipment	$7,000
	Cash		$7,000
	To record air conditioner cost
31/12/2016	Depreciation expense (282600+7000-27000-2100)/4	$65,125
	Accumulated Depreciation - Equipment		$65,125
	To record annual depreciation Expense
1/1/2017	Equipment	$4,700
	Cash		$4,700
	To record Expense incurred for overhauling the equipment
17-02-2017	Repairs expense	$1,175
	cash		$1,175
	To record Expnse incurred for repair to equipment
31-12-2017	Depreciation expense (282600+7000-27000-2100+4700-65125)/6	$33,346
	Accumulated Depreciation - Equipment		$33,346
	To record annual depreciation Expense