Problem - Computing and revising depreciation; revenue and capital expenditures
Maxil Contractors completed the following transactions and events involving the purchase and operation of equipment in its business.
2010
Jan. 1 Paid $278,000 cash plus $11,120 in sales tax and $1,600 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $27,800 salvage value. Loader costs are recorded in the Equipment account.
Jan. 3 Paid $4,000 to enclose the cab and install air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,200.
Dec. 31 Recorded annual straight-line depreciation on the loader.
2011
Jan. 1 Paid $4,400 to overhaul the loader's engine, which increased the loader's estimated useful life by two years.
Feb. 17 Paid $1,100 to repair the loader after the operator backs it into a tree.
Dec. 31 Recorded annual straight-line depreciation on the loader.
Required: Prepare journal entries to record these transactions and events.