Reference no: EM132794486

Question - Champion Contractors completed the following transactions involving equipment.

Year 1

Jan. 1 Paid $266,000 cash plus $10,640 in sales tax and $1,800 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $26,600 salvage value. Loader costs are recorded in the Equipment account.

Jan. 3 Paid $6,000 to install air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,800.

Dec. 31 Recorded annual straight-line depreciation on the loader.

Year 2

Jan. 1 Paid $4,200 to overhaul the loader's engine, which increased the loader's estimated useful life by two years.

Feb. 17 Paid $1,050 for minor repairs to the loader after the operator backed it into a tree.

Dec. 31 Recorded annual straight-line depreciation on the loader.

Required - Make journal entries to record these transactions and events.