The cost of current year to be capitalized and expensed. Given information: Truck acquired for $57,000. Shelving cost is $2,800. Cost of new set of tires is $1,200. Cost of seat cover replacement is $110.

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The following information applies to the questions displayed below.] The following transactions relate to Academy Towing Service. Assume the transactions for the purchase of the wrecker and any capital improvements occur on January 1 of each year. Year 1 Acquired $73,000 cash from the issue of common stock. Purchased a used wrecker for $35,000 cash. It has an estimated useful life of three years and a $6,000 salvage value. Paid sales tax on the wrecker of $4,000. Collected $59,100 in towing fees. Paid $12,300 for gasoline and oil. Recorded straight-line depreciation on the wrecker for Year 1. Closed the revenue and expense accounts to Retained Earnings at the end of Year 1. Year 2 Paid for a tune-up for the wrecker’s engine, $1,200. Bought four new tires, $1,550. Collected $65,000 in towing fees. Paid $18,300 for gasoline and oil. Recorded straight-line depreciation for Year 2. Closed the revenue and expense accounts to Retained Earnings at the end of Year 2. Year 3 Paid to…

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Chapter 11, Problem 11.8BE

To determine

The cost of current year to be capitalized and expensed.

Given information:

Truck acquired for $57,000.

Shelving cost is $2,800.

Cost of new set of tires is $1,200.

Cost of seat cover replacement is $110.

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The following information applies to the questions displayed below.] The following transactions relate to Academy Towing Service. Assume the transactions for the purchase of the wrecker and any capital improvements occur on January 1 of each year. Year 1 Acquired $73,000 cash from the issue of common stock. Purchased a used wrecker for $35,000 cash. It has an estimated useful life of three years and a $6,000 salvage value. Paid sales tax on the wrecker of $4,000. Collected $59,100 in towing fees. Paid $12,300 for gasoline and oil. Recorded straight-line depreciation on the wrecker for Year 1. Closed the revenue and expense accounts to Retained Earnings at the end of Year 1. Year 2 Paid for a tune-up for the wrecker’s engine, $1,200. Bought four new tires, $1,550. Collected $65,000 in towing fees. Paid $18,300 for gasoline and oil. Recorded straight-line depreciation for Year 2. Closed the revenue and expense accounts to Retained Earnings at the end of Year 2. Year 3 Paid to…

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