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Clarion contractors case study: journalizing transactions

Clarion contractors completed the following transactions and events

Jan 1 paid 255440 cash plus 15200 in sales tax and 2500 in transportation fees for a new loader. Loader has a four year life and a 34740 salvage value. Loader costs are recorded in the equipment account.

Jan 3 Paid 3660 to enclose the cab and install air conditioning . This increased the salvage value by 1110

dec 31 Recorded annual straight line depreciation by loader

2005

Jan 1 Oaid 4500 to overhaul the loaders engine which increased the loaders estimated usefull life by two years

feb 17 Paid 920 to repair loader after the operator backs into a tree

dec 31 Recorded annual straight line depreciation on loader

1. Prepare journal entries to record these transactions and events

Solution Preview

2004:
Jan 1 Property, plant, and equipment - Loader 273,140 (= 255440 + 15200 + 2500)
Cash 273,140
(* note: no depreciation at the moment)

Jan 3 Property, plant, and equipment - Loader 3660
Cash ...

$2.19