Question

Great Adventures Problem AP7-1 [The following information applies to the questions displayed below.) Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 4.2022. for $12,400. They expect to use the Suburban for five years and then sell the vehicle for $4,700. The following expenditures related to the vehicle were also made on July 1, 2022 • The company pays $1,900 to GEICO for a one-year insurance policy. • The company spends an extra $3.400 to repaint the vehicle, placing the Great Adventures logo on the front hood. back, and both sides. • An additional $2.100 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 $600 for basic vehicle maintenance related to changing the oil replacing the windshield wipers, rotating the tires, and inserting a new air filter. Great Adventures Problem AP7-1 Part 1 Required: 1. Record the expenditures related to the vehicle on July 1, 2022. Note: The capitalized cost of the vehicle is recorded in the Equipment account. (If no entry is required for a transaction event, select "No Journal Entry Required in the first account field.) 3 Answer is not complete. General Journal Credit No 1. Date 01.2022 Debit 17.000 Equipment Prepagina < Prev 10 10 11 Next >

Answer 1

Solution

No	Date	General Journal	Debit	Credit
1	Jul 01, 2022	Equipment	$          17,900.00
		Prepaid Insurance	$            1,900.00
		Cash		$       19,800.00
		(To record purchase of Equipment and prepaid insurance)

Insurance cost will expire in one year hence insurance cost should not be capitalized. Equipment cost includes the roof rack and painting.