E 9-4A.

Revision of Depreciation

On January 2, 2012, Mosler, Inc., purchased equipment for $85,000. The equipment was expected to have a $10,000 salvage value at the end of its estimated six-year useful life. Straight-line depreciation has been recorded. Before adjusting the accounts for 2016, Mosler decided that the useful life of the equipment should be extended by three years and the salvage value decreased to $8,000.

a. Prepare a journal entry to record depreciation expense on the equipment for 2016.

b. What is the book value of the equipment at the end of 2016 (after recording the depreciation expense for 2016)?

a.

Debit Account

Credit Account

Debit Amount

Credit Amount

b.

Book Value =

E 9-6A.

Revenue and Capital Expenditures

Shively Company built an addition to its chemical plant. Indicate whether each of the following expenditures related to the addition is a revenue expenditure or a capital expenditure:

Revenue/Capital

a. Shively's initial application for a building permit was denied by the city as not conforming to environmental standards. Shively disagreed with the decision and spent $6,000 in attorney's fees to convince the city to reverse its position and issue the permit.

b. Due to unanticipated sandy soil conditions, and on the advice of construction engineers, Shively spent $58,000 to extend the footings for the addition to a greater depth than originally planned.

c. Shively spent $3,000 to send each of the addition's subcontractors a side of beef as a thank-you gift for completing the project on schedule.

d. Shively invited the mayor to a ribbon-cutting ceremony to open the plant addition. It spent $25 to purchase the ribbon and scissors.

e. Shively spent $4,100 to have the company logo sandblasted into the concrete above the entrance to the addition.

E 9-7A.

Sale of Plant Asset

Raine Company has a machine that originally cost $58,000. Depreciation has been recorded for four years using the straight-line method, with a $5,000 estimated salvage value at the end of an expected ten-year life. After recording depreciation at the end of four years, Raine sells the machine. Prepare the journal entry to record the machine's sale for:

a. $37,000 cash

b. $36,800 cash

c. $28,000 cash

Debit Account

Credit Account

Debit Amount

Credit Amount

a.

Debit Account

Credit Account

Debit Amount

Credit Amount

b.

Debit Account

Credit Account

Debit Amount

Credit Amount

c.