Question

Required information 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 1, 2022, for $15,200. They expect to use the Suburban for five years and then sell the vehicle for $6,100. The following expenditures related to the vehicle were also made on July 1, 2022: • The company pays $2,600 to GEICO for a one-year insurance policy. • The company spends an extra $6,200 to repaint the vehicle, placing the Great Adventures logo on the front hood, back, and both sides. • An additional $2,800 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 $2,000 for basic vehicle maintenance related to changing the oil, replacing the windshield wipers, rotating the tires, and inserting a new air filter.

Answer 1

	Equipment cost	24200	=15200+6200+2800
Date	General Journal	Debit	Credit
Dec 31,2022	Depreciation expense	1810		=(24200-6100)/5*6/12
	Accumulated Depreciation-Equipment		1810
Dec 31,2022	Insurance expense	1300		=2600*6/12
	Prepaid Insurance		1300