E9-5 (Algo) Determining Financial Statement Effects of Straight-Line Depreciation and Repairs [LO 9-2, LO 9-3]

Wiater Company operates a small manufacturing facility. On January 1, 2021, an asset account for the company showed the following balances:

Equipment$ 310,000Accumulated Depreciation (beginning of the year)141,000

During the first week of January 2021, the following cash expenditures were incurred for repairs and maintenance:

Routine maintenance and repairs on the equipment$ 3,650Major overhaul of the equipment that improved efficiency42,000

The equipment is being depreciated on a straight-line basis over an estimated life of 10 years with a $28,000 estimated residual value. The annual accounting period ends on December 31.

Required:

Prepare the adjusting journal entry that would have been made at the end of 2020 for depreciation on the manufacturing equipment.

Starting at the beginning of 2021, what is the remaining estimated life?

Prepare the journal entries to record the two expenditures for repairs and maintenance during 2021.