Instructions Next Level McClain Company incurred the following expenditures during 2016: What is the effect on the financial statements if management had improperly addition of the new wing to the manufacturing facility? If the addition had been expensed instead of capitalized, assets and net income would be for the Apr 9 The air conditioning system in the old manufacturing facility was replaced for 588,500. The old air conditioning system had a cost of $70,500 and a book value of $1,600. The old air conditioning system had no scrap value Annual maintenance of S38,750 was performed in 2016 and in future periods June 29 Sept 12 The roof of the old manufacturing facility is replaced at a cost What is the effect on the financial statements if management had improperly for the of 569,750. This expenditure substantially extended the life of the facility annual maintenance expenditures? Dec 28 A new wing was added to the manufng facility at a cost If the maintenance expenditures had been capitalized, assets and net income would be of 5280,000. This expenditure substantially increased the in the year of the expenditure. In future periods, this asset would be productive capacity of the plant. depreciated, causing income to be Required: 1. Prepare joumal entries to record McClain's expenditures for 2016. 2. Next Level What is the effect on the financial statements if management had improperly accounted for the a. addition of the new wing to the manufacturing facility