Hulme Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of 2020, an asset account for the company showed the following balances:

Manufacturing equipment ................................... $120,000Accumulated depreciation through 2019 ............... 57,600

During 2020, the following expenditures were incurred for the equipment:

The equipment is being depreciated on a straight-line basis over an estimated life of 15 years with a $12,000 estimated residual value. The annual accounting period ends on December 31.

Required:

1. Give the adjusting entry that was made at the end of 2019 for depreciation on the manufacturing equipment.

2. Starting at the beginning of 2020, what is the remaining estimated life?

3. Give the journal entries to record the two expenditures during 2020.

Transcribed Image Text:

Major overhaul of the equipment on January 2, 2020, that improved efficiency Routine maintenance and repairs on the equipment $13,000 1,000