Exercise 10-14 Ordinary repairs, extraordinary repairs, and betterments LO C3

Oki Company pays $294,600 for equipment expected to last four years and have a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment.

1. Paid $28,300 cash for a new component that increased the equipments productivity.
2. Paid $7,075 cash for minor repairs necessary to keep the equipment working well.
3. Paid $21,250 cash for significant repairs to increase the useful life of the equipment from four to seven years.

Journal entry worksheet

• Record the betterment cost of $28,300 paid in cash.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
1

• Record the cost of minor repairs of $7,075 paid in cash to keep the equipment working well.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
2

• Record the cost of significant repairs of $21,250 paid in cash to increase the useful life of the equipment.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
3