Tony and Suzie purchase a Suburban for $12,000. The vehicle is purchased in late June, and will be put into use on July 1, 2013. Annual insurance from GEICO runs $1800 per year. The paint is starting to fade, so they spend an extra $3,000 to repaint the vehicle, placing the Great Adventures logo on the front hoood, back, and both sides. An additional $2,000 is spent on a deluxe roof rack and a trailer hitch. They expect to use the Suburban for five years and then sell the vehicle for 4500.
1. Determine the amount that should be recorded for the new vehicle.
2. Indicate where any amounts not included in the Equipment account should be recorded.
3. Prepare a depreciation schedule using the straight line. The first and last years will have a half year of depreciation due to the beginning of service life on July 1.
4. Record the sale of the vehicle two years later on July 1, 2015, for $10,000.