Question

Required information [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 $15,400. They expect to use the Subur then sell the vehicle for $6,200. The following expenditures related to the vehicle were also made on July 1, 2022 • The company pays $2,650 to GEICO for a one-year insurance policy. • The company spends an extra $6,400 to repaint the vehicle, placing the Great Adventures logo on the front hood, back, and both sides. • An additional $2,850 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 $2,100 for basic vehicle maintenance related to changing the oil, replacing the windshield wipers, rotating the tires, and inserting a new air filter

Answer 1

capitalized cost of vehicle
purchase cost		15400
extra expenditure on paint		6400
additional expenditure on roof rack		2850
capitalized cost of vehicle		24650
date	explanation	debit	credit
1-Jul	Vehicle	24650
	cash		24650
	(vehicle purchased and expenses incurred for rennovation)
1-Jul	prepaid Insurance	2650
	cash		2650
	Insurance expenses paid for new vehicle
22-Oct	Repair and maintenance expense	2100
	cash		2100
Annual Depreciation	(24650-6200)/5	3690
Year	Depreciation expense	accumulated depreciation	Book value
2022	1845	1845	22805
2023	3690	5535	19115
2024	3690	9225	15425
2025	3690	12915	11735
2026	3690	16605	8045
2027	1845	18450	6200
total	18450
date	explanation	debit	credit
dec 31 2022	depreciation expense	1845
	accumulated depreciation		1845
31-Dec	Insurance expense	1325
	prepaid insurance		1325
July 1 2024	cash	selling price is not provided
	accumulated depreciation
	vehicle
	(vehicle sold at book value)