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 $70,000 cash from the issue of common stock.
- Purchased a used wrecker for $32,000. It has an estimated useful life of three years and a $5,000 salvage value.
- Paid sales tax on the wrecker of $3,000.
- Collected $56,100 in towing fees.
- Paid $12,000 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, $900.
- Bought four new tires, $1,250.
- Collected $62,000 in towing fees.
- Paid $18,000 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 overhaul the wrecker’s engine, $4,800, which extended the life of the wrecker to a total of four years. The salvage value did not change.
- Paid for gasoline and oil, $19,100.
- Collected $65,000 in towing fees.
- Recorded straight-line depreciation for Year 3.
- Closed the revenue and expense accounts at the end of Year 3.