Expand Your Critical Thinking 9-7 a-c Alter meeting with Software Solutions, as described in Chapter 8, Emily was able to negotiate credit terms of 10 days and decided to take on the additional work offered by Software Solutions. In order to better handle this work, ABC decided to upgrade its computer equipment and Nire two additional employees. At or some research and much discussion, the computer upgrades and costs were determined to be as follows: 1. Old server will be retired and donated to the community centre. It was originally purchased for $5,000 on January 3, 2014. It is being deprecated on a straight-line basis over a five-year useful life with no residual value. 2. Purchase of a new server, including installation, $33,200. 3. Purchase of computing equipment for the new employees at a cost of $7,820. 4. Purchase of additional yearly software usage licences for the two new employees at a cost of $1,260 each. 5. Purchase of additional office furniture at a cost of $2,910, plus delivery and shipping costs of $640. 6. Additional insurance is required, $920 per year. 7. Rearranging the office space and repainting the office to "freshen things up at a cost of $3,685. 5 Doug, Bev, and Emily anticipate that the cost of the upgrade can be financed with cash the company currently has in the bank. The upgrades will take place between Christmas and New Year's when the sales at the business are a little slower. If all goes smoothly, the new equipment will be installed and ready for use by January 2, 2016 Emily is concerned about how to record these transactions in the accounting records. She is not certain which costs should be capitalized and which should be expensed Identity which of the above costs should be capitalized and which should be expensed. Total costs to be capitalized Hams should be expensed. PRINTER VERSION BACK NEXT Prepare the journal entries to record the retirement of the old server (item 1) on January 2, 2018, for no proceeds. The last time depreciation was recorded was on une J0, 2017 (Credit accountries are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the accountitles and enter for the amounts, Round answers to decimal Nances 0.5,275) Account Titles and Explanation Credit Jan. 2 (To record depreciation expense) Jan. 2 (To record sale of equipment and related loss/gain) Record the journal entry to record items 2 through 7 above. Assume all transactions are cash transactions and occurred on January 2, 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select No Entry for the account titles and enter for the amounts.) Date Account Titles and Explanation Credit Debit Jan. 2 Ot 3 e 60 44 ENG 2020-04-17 to search