Computing and Revising Revenues and Capital Expenditures
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Fundamental Accounting Principals, 18th Edition
Wild, Larson, Chiappetta, McGraw-Hill Irwin
Problem 10-3A: Computing and revising depreciation; revenue and capital expenditures.
Champion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business.
2007
Jan. 1 Paid $287,600 cash plus $11,500 in sales tax and $1,500 in transportation (FOB
shipping point) for a new loader. The loader is estimated to have a four-year life
and a $20,600 salvage value. Loader cost are recorded in the Equipment account.
Jan. 3 Paid $4,800 to enclose the cab and install air conditioning in the loader to enable
operations under harsher conditions. This increased the estimated salvage value
of the loader by another $1,400.
Dec. 31 Recorded annual straight-line depreciation on the loader.
2008
Jan. 1 Paid $5,400 to overhaul the loader's engine, which increased the loader's
estimated useful life by two years.
Feb. 17 Paid $820 to repair the loader after the operator backs it into a tree.
Dec. 31 Recorded annual straight-line depreciation on the loader.
Required: Prepare journal entries to record these transactions and events.
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Solution Summary
The solution explains how to record the journal entries for the given transactions
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Fundamental Accounting Principals, 18th Edition
Wild, Larson, Chiappetta, McGraw-Hill Irwin
Problem 10-3A: Computing and revising depreciation; revenue and capital expenditures.
Champion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business.
2007
Jan. 1 Paid $287,600 cash plus $11,500 in sales tax and $1,500 in transportation (FOB
shipping point) for a new loader. The loader is estimated to have a four-year life
and a $20,600 salvage value. Loader cost are recorded in the Equipment account.
The total cost is the total amount spent in getting the loader ready for use. The total cost is ...
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