Easy Move Company made the following expenditures on one of its delivery trucks:Feb. 4.Replaced transmission at a cost of $4,625.May. 6.Paid $1,615 for installation of a hydraulic lift.Sept. 10.Paid $69 to change the oil and air filter.Prepare the journal entries for each expenditure.
To prepare the journal entries for each expenditure, we need to identify the accounts that are affected by each transaction.
1. Feb. 4: Replaced transmission at a cost of $4,625.
- The truck's value should be increased (debit) for the cost of the transmission replacement.
- The company's cash or accounts payable should be decreased (credit) for the amount paid.
The journal entry would be:
Debit: Truck (increase in value) - $4,625
Credit: Cash (or Accounts Payable) - $4,625
2. May 6: Paid $1,615 for installation of a hydraulic lift.
- The truck's value should be increased (debit) for the cost of the hydraulic lift installation.
- The company's cash or accounts payable should be decreased (credit) for the amount paid.
The journal entry would be:
Debit: Truck (increase in value) - $1,615
Credit: Cash (or Accounts Payable) - $1,615
3. Sept. 10: Paid $69 to change the oil and air filter.
- This transaction is considered a regular maintenance expense.
- The company's maintenance expense account should be increased (debit).
- The company's cash or accounts payable should be decreased (credit) for the amount paid.
The journal entry would be:
Debit: Maintenance Expense - $69
Credit: Cash (or Accounts Payable) - $69
Remember, these are general guidelines, and it's always recommended to consult with an accountant or follow your company's specific accounting practices when recording journal entries.