E8-7 LO8-2, 8-3 Recording Depreciation and Repairs (Straight-Line Depreciation) Hulme Company operates a small manufactu
Posted: Wed Jul 06, 2022 6:09 am
E8-7LO8-2, 8-3
Recording Depreciation and Repairs (Straight-LineDepreciation)Hulme Company operates a small manufacturing facility as asupplement to its regular service activities.At the beginning of 2020, an asset account for the company showedthe following balances:
Manufacturing equipment
$120,000
Accumulated depreciation through 2019
57,600
During 2020, the following expenditures were incurred for theequipment:
Major overhaul of the equipment on January 2, 2020, thatimproved efficiency
$13,000
Routine maintenance and repairs on the equipment
1,000
The equipment is being depreciated on a straight-line basis overan estimated life of 15 years with a
$12,000 estimated residual value. The annual accounting periodends on December 31.
Required:
1. Give the adjusting entry that was made at the end of 2019 fordepreciation on the manufacturing
equipment.
2. Starting at the beginning of 2020, what is the remainingestimated life?
3. Give the journal entries to record the two expendituresduring 2020.
Recording Depreciation and Repairs (Straight-LineDepreciation)Hulme Company operates a small manufacturing facility as asupplement to its regular service activities.At the beginning of 2020, an asset account for the company showedthe following balances:
Manufacturing equipment
$120,000
Accumulated depreciation through 2019
57,600
During 2020, the following expenditures were incurred for theequipment:
Major overhaul of the equipment on January 2, 2020, thatimproved efficiency
$13,000
Routine maintenance and repairs on the equipment
1,000
The equipment is being depreciated on a straight-line basis overan estimated life of 15 years with a
$12,000 estimated residual value. The annual accounting periodends on December 31.
Required:
1. Give the adjusting entry that was made at the end of 2019 fordepreciation on the manufacturing
equipment.
2. Starting at the beginning of 2020, what is the remainingestimated life?
3. Give the journal entries to record the two expendituresduring 2020.