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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 $15,600. They expect to use the Suburban for five years and then sell the vehicle for $6,300. The following expenditures related to the vehicle were also made on July 1, 2022:

• The company pays $2,700 to GEICO for a one-year insurance policy.
• The company spends an extra $6,600 to repaint the vehicle, placing the Great Adventures logo on the front hood, back, and both sides.
• An additional $2,900 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 $2,200 for basic vehicle maintenance related to changing the oil, replacing the windshield wipers, rotating the tires, and inserting a new air filter.

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.)

2. Prepare a depreciation schedule using the straight-line method.

Years 2202-2027 Depreciation Expense Accumulated Depreciation Book Value

3. Record the depreciation expense and any other adjustments related to the vehicle on December 31, 2022. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

  

Answer 1

Date	General Journal	Debit	Credit
July 1,2022	Equipment	12200
	Cash		12200
	(To expenditure made capitalized)
Book value as on July 1,2022 =$15,600 + $12,200 =$27,800
Straight Line
Date	Cost of asset	Depreciable cost	Depreciation rate	Depreciation expenses	Accumulated Depreciation	Book value
2022-6 months	$27,800	$21,500	10%	$2,150	$2,150	$25,650
2023	$27,800	$21,500	20%	$4,300	$6,450	$21,350
2024	$27,800	$21,500	20%	$4,300	$10,750	$17,050
2025	$27,800	$21,500	20%	$4,300	$15,050	$12,750
2026	$27,800	$21,500	20%	$4,300	$19,350	$8,450
2027-6 months	$27,800	$21,500	10%	$2,150	$21,500	$6,300
Date	General Journal	Debit	Credit
July 1,2022	Depreciation expenses-Equipment	$2,150
	Accumulated Depreciation-Equipment		$2,150