Saul's Manufacturing Company owns various machinery and equipment, among other capital assets, which are used in its manufacturing process. In 2014, one of the machines suddenly stopped working and a technician was called in to assess the problem. The technician was able to apply oil to a certain part of the machine and return it to normal working order after 4 hours of labor. Saul's Manufacturing Company subsequently received a bill from the technician for $1,030 which the accountant recorded as a debit to machinery and credit to accounts payable with a plan to pay off the balance in 2015. What is the effect of the journal entry on the financial statements of Saul's Manufacturing Company?

Multiple Choice

• The transaction was recorded erroneously because the bill should not have been recorded until 2015

• The transaction was accounted for correctly

• The depreciation expense for 2014 and following years was overstated

• The transaction was recorded incorrectly and is considered a permanent error

• The transaction may be recorded correctly but we need additional information to know for certain