Question
Wiater Company operates a small manufacturing facility. On January 1, 2018, an asset account for the company showed the following balances: Equipment $ 310,000 Accumulated
Wiater Company operates a small manufacturing facility. On January 1, 2018, an asset account for the company showed the following balances:
Equipment | $ | 310,000 | |
Accumulated Depreciation (beginning of the year) | 141,000 | ||
During the first week of January 2018, the following expenditures were incurred for repairs and maintenance:
Routine maintenance and repairs on the equipment | $ | 3,650 | |
Major overhaul of the equipment that improved efficiency | 42,000 | ||
The equipment is being depreciated on a straight-line basis over an estimated life of 10 years with a $28,000 estimated residual value. The annual accounting period ends on December 31.
Required:
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Prepare the adjusting journal entry that would have been made at the end of 2017 for depreciation on the manufacturing equipment.
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Starting at the beginning of 2018, what is the remaining estimated life?
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Prepare the journal entries to record the two expenditures for repairs and maintenance during 2018.
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