Mahoney Company Had the Following Transactions Involving Plant Assets During

question 68

Essay

Mahoney Company had the following transactions involving plant assets during 2010 and 2010.Unless otherwise indicated,all transactions were for cash.
$\begin{array}{|c|l|}\hline 2009 & \\\hline \text { Jan. 2 } & \begin{array}{l}\text { Purchased a truck for } \$ 50,000 \text {. Sales tax on the truck was } \$ 3,000 \text {, and the license } \\\text { was } \$ 250 . \text { The truck is expected to have a } \$ 4,000 \text { salvage value and a 4-year life. }\end{array} \\\hline \text { Jan. 3 } & \begin{array}{l}\text { Paid } \$ 1,500 \text { to have the company's logo painted on the truck. This did not change } \\\text { the truck's salvage value. }\end{array} \\\hline \text { Dec.31 } & \text { Recorded straight-line depreciation on the truck. } \\\hline\\\hline 2010 & \\\hline \text { Jan. 5 } & \begin{array}{l}\text { Paid } \$ 5,000 \text { to put a bigger engine in the truck. This new engine is expected to } \\\text { make the truck run more efficiently, and will increase the truck's useful life by } \\\text { one year. The salvage value remained at } \$ 4,000 .\end{array} \\\hline \text { Mar. 1 } & \begin{array}{l}\text { Paid } \$ 2,000 \text { to replace a broken tailgate. The tailgate was damaged when a heavy } \\\text { carton was inadvertently dropped on it. }\end{array} \\\hline \text { Dec. 31 } & \text { Recorded straight-line depreciation on the truck. }\\\hline \end{array}$

Prepare the general journal entries to record these transactions.

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Definitions:

Beneficiary

An individual or entity designated to receive benefits from an insurance policy, retirement plan, will, or trust after the policyholder's or owner's death.

Nondeductible Contributions

Payments made to certain accounts or plans, such as a traditional IRA, for which the taxpayer cannot take a tax deduction.

Adjusted Basis

The value of an asset for tax purposes, adjusted for factors like depreciation or improvements.

Traditional IRA

A Traditional Individual Retirement Account (IRA) is a type of retirement savings account that allows pre-tax contributions, with the investments growing tax-deferred until withdrawals begin at retirement.