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

1. Acquired $73,000 cash from the issue of common stock.
2. Purchased a used wrecker for $35,000 cash. It has an estimated useful life of three years and a $6,000 salvage value.
3. Paid sales tax on the wrecker of $4,000.
4. Collected $59,100 in towing fees.
5. Paid $12,300 for gasoline and oil.
6. Recorded straight-line depreciation on the wrecker for Year 1.
7. Closed the revenue and expense accounts to Retained Earnings at the end of Year 1.

Year 2

1. Paid for a tune-up for the wrecker’s engine, $1,200.
2. Bought four new tires, $1,550.
3. Collected $65,000 in towing fees.
4. Paid $18,300 for gasoline and oil.
5. Recorded straight-line depreciation for Year 2.
6. Closed the revenue and expense accounts to Retained Earnings at the end of Year 2.

Year 3

1. Paid to overhaul the wrecker’s engine, $5,100, which extended the life of the wrecker to a total of four years. The salvage value did not change.
2. Paid for gasoline and oil, $19,400.
3. Collected $68,000 in towing fees.
4. Recorded straight-line depreciation for Year 3.
5. Closed the revenue and expense accounts at the end of Year 3.