Clarion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business. 2010 Jan. 1 Paid $310,000 cash plus $12,400 in sales tax and $1,900 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $31,000 salvage value. Loader costs are recorded in the Equipment account. Jan. 3 Paid $7,000 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 $2,100. Dec. 31 Recorded annual straight-line depreciation on the loader. 2011 Jan. 1 Paid $4,700 to overhaul the loader’s engine, which increased the loader’s estimated useful life by two years. 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. (Round your intermediate calculations and final answers to the nearest dollar amount.)

Clarion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business.

  

2010
Jan.	1	Paid $310,000 cash plus $12,400 in sales tax and $1,900 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $31,000 salvage value. Loader costs are recorded in the Equipment account.
Jan.	3	Paid $7,000 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 $2,100.
Dec.	31	Recorded annual straight-line depreciation on the loader.

  

2011
Jan.	1	Paid $4,700 to overhaul the loader’s engine, which increased the loader’s estimated useful life by two years.
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. (Round your intermediate calculations and final answers to the nearest dollar amount.)   Explanation: Jan. 1, 2010: To record loader costs ($310,000 +$12,400 +$1,900) = $324,300    Dec. 31, 2010:   2010 depreciation after January 3rd betterment   Total original cost $ 324,300     Plus cost of betterment   7,000       Revised cost of equipment   331,300     Less revised salvage ($31,000 + $2,100)   33,100       Cost to be depreciated   298,200       Annual depreciation ($298,200 / 4 years) (rounded) $ 74,550        Dec. 31, 2011:   2011 depreciation after January 1st extraordinary repair   Total cost ($331,300 + $4,700) $ 336,000       Less accumulated depreciation   74,550           Book value   261,450       Less salvage   33,100           Remaining cost to be depreciated $ 228,350           Revised remaining useful life (Original 4 years – 1yr. + 2yrs.)   5.0   yrs.       Revised annual depreciation ($228,350 / 5 yrs) (rounded) $ 45,670