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McClain Company incurred the following expenditures during 2019: Apr. 9 The air conditioning system in the old manufacturing facility was replaced for $86,000. The old
McClain Company incurred the following expenditures during 2019:
Apr. | 9 | The air conditioning system in the old manufacturing facility was replaced for $86,000. The old air conditioning system had a cost of $72,500 and a book value of $3,000. The old air conditioning system had no scrap value. |
June | 29 | Annual maintenance of $35,500 was performed. |
Sept. | 12 | The roof of the old manufacturing facility is replaced at a cost of $62,500. This expenditure substantially extended the life of the facility. |
Dec. | 28 | A new wing was added to the manufacturing facility at a cost of $252,000. This expenditure substantially increased the productive capacity of the plant. |
Required:
1. | Prepare journal entries to record McClains expenditures for 2019. | ||||
2. | Next Level What is the effect on the financial statements if management had improperly accounted for the:
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CHART OF ACCOUNTSMcClain CompanyGeneral Ledger
ASSETS | |
111 | Cash |
121 | Accounts Receivable |
141 | Inventory |
152 | Prepaid Insurance |
181 | Building |
185 | Equipment |
188 | Air Conditioning System (New) |
189 | Air Conditioning System (Old) |
198 | Accumulated Depreciation: Air Conditioning System (Old) |
199 | Accumulated Depreciation: Building |
LIABILITIES | |
211 | Accounts Payable |
231 | Salaries Payable |
250 | Unearned Revenue |
261 | Income Taxes Payable |
EQUITY | |
311 | Common Stock |
331 | Retained Earnings |
REVENUE | |
411 | Sales Revenue |
881 | Gain on Disposal of Property, Plant, and Equipment |
EXPENSES | |
500 | Cost of Goods Sold |
511 | Insurance Expense |
512 | Utilities Expense |
514 | Repair and Maintenance Expense |
521 | Salaries Expense |
532 | Bad Debt Expense |
540 | Interest Expense |
541 | Depreciation Expense |
559 | Miscellaneous Expenses |
893 | Loss on Disposal of Property, Plant, and Equipment |
910 | Income Tax Expense |
1. Prepare journal entries to record McClains expenditures for 2019.
General Journal Instructions
Question not attempted.
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GENERAL JOURNAL
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