Question

Armada Ski’s year end is December 31. Some of the 2019 transactions are as follows:

March 1 Paid $135,000 cash to purchase the following two assets:

                                    Market               Est. Useful Est. Residual

               Asset           Value                       Life                Value

               Land             $80,000                    -                      -

               Warehouse     60,000             20 years           $5,000

Armada Ski will use the straight-line amortization method for the warehouse.

April 1    Purchased a used delivery van for $20,000 cash. The van sells for $30,000 when new. The van is expected to be used for 7 years and driven 200,000 km. The estimated salvage value is $5,000. It will be amortized using the units-of-production method.

April 1     Installed heavy-duty suspension costing $2,000 that will enable the van to pull the Armada Ski trailer to various ski demo days at local ski hills.

June 30 Paid a local glass shop $400 to replace the windshield which had been damaged by a pair of skis.    

Dec. 31 Recorded amortization on the assets. The van was driven 17,000 kilometers since it was purchased.

Record the journal entries for the above transactions of Armada Ski Shop. Round all amounts to the nearest dollar. Explanations are not required.

Answer 1