Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a u
sed Suburban on July 1, 2022, for $15,800. They expect to use the Suburban for five years and then sell the vehicle for $6,400. The following expenditures related to the vehicle were also made on July 1, 2022: The company pays $2,750 to GEICO for a one-year insurance policy. The company spends an extra $6,800 to repaint the vehicle, placing the Great Adventures logo on the front hood, back, and both sides. An additional $2,950 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 $2,300 for basic vehicle maintenance related to changing the oil, replacing the windshield wipers, rotating the tires, and inserting a new air filter.
Required:
a. Record the expenditures related to the vehicle on July 1, 2022. Note: The capitalized cost of the vehicle is recorded in the Equipment account.
b. Record the expenditure related to vehicle maintenance on October 22, 2022.
c. Record the depreciation for vehicle purchased. Use straight-line depreciation.
d. Record the expiration of prepaid insurance.
e. Record the closing entry for revenue accounts.
f. Record the closing entry for expense accounts.
Required:
a. Record the expenditures related to the vehicle on July 1, 2022. Note: The capitalized cost of the vehicle is recorded in the Equipment account.
b. Record the expenditure related to vehicle maintenance on October 22, 2022.
c. Record the depreciation for vehicle purchased. Use straight-line depreciation.
d. Record the expiration of prepaid insurance.
e. Record the closing entry for revenue accounts.
f. Record the closing entry for expense accounts.
1 answer:
Answer:
Kindly check the attached images below for the well arranged account entries
Explanation:
1
Date General Journal Debit Credit
Jul 01,2022 Equipment 25550 =15800+6800+2950
Prepaid Insurance 2750
Cash 28300
2
Date General Journal Debit Credit
Dec 31,2022 Depreciation expense 1915 =(25550-6400)/5*6/12
Accumulated Depreciation-Equipment 1915
3
Year Depreciation expense Accumulated
Depreciation Book value
2022 1915 1915 23635
2023 3830 5745 19805
2024 3830 9575 15975
2025 3830 13405 12145
2026 3830 17235 8315
2027 1915 19150 6400
Total 19150
4
Date General Journal Debit Credit
Dec 31,2022 Insurance expense 1375 =2750*6/12
Prepaid insurance 1375
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