McClain Company incurred the following expenditures during 2019: Apr. 9 the air conditioning system in the old manufacturing facility was replaced for 83,000. the old air conditioning syste, had a cost of $74,000 and a book value of $2,000. the old air conditioning system had no scrap value. June 29 Annual maintenance of $38,000 was performed.

McClain Company incurred the following expenditures during 2019: Apr. 9 the air conditioning system in the old manufacturing facility was replaced for 83,000. the old air conditioning syste, had a cost of $74,000 and a book value of $2,000. the old air conditioning system had no scrap value. June 29 Annual maintenance of $38,000 was performed.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4PB: During the current year, Arkells Inc. made the following expenditures relating to plant machinery. ...

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During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated seven machines for $250,000 to improve efficiency in production of their remaining useful life of eight years Low-cost repairs throughout the year totaled $79,000 Replaced a broken gear on a machine for $6,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated five machines for $100,000 to improve efficiency in production of their remaining useful life of five years Low-cost repairs throughout the year totaled $70,000 Replaced a broken gear on a machine for $10,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
The following are independent errors: a. In January 2019, repair costs of 9,000 were debited to the Machinery account. At the beginning of 2019, the book value of the machinery was 100,000. No residual value is expected, the remaining estimated life is 10 years, and straight-line depreciation is used. b. All purchases of materials for construction contracts still in progress have been immediately expensed. It is discovered that the use of these materials was 10,000 during 2018 and 12,000 during 2019. c. Depreciation on manufacturing equipment has been excluded from manufacturing costs and treated as a period expense. During 2019, 40,000 of depreciation was accounted for in that manner. Production was 15,000 units during 2019, of which 3,000 remained in inventory at the end of the year. Assume there was no inventory at the beginning of 2019. Required: Prepare journal entries for the preceding errors discovered during 2020. Ignore income taxes.
On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
McClain Company incurred the following expenditures during 2019: Apr. June Sept. Dec. 9 The air conditioning system in the old manufacturing facility was replaced for $80,000. The old air conditioning system had a cost of $71,750 and a book value of $1,700. The old air conditioning system had no scrap value. 29 Annual maintenance of $39,500 was performed. 12 The roof of the old manufacturing facility is replaced at a cost of $68,000. This expenditure substantially extended the life of the facility. 28 A new wing was added to the manufacturing facility at a cost of $261,000. This expenditure substantially increased the productive capacity of the plant. Required: 1. Prepare journal entries to record McClain's expenditures for 2019. 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 b. annual maintenance expenditures
McClain Company incurred the following expenditures during 2019: Apr. 9 The air conditioning system in the old manufacturing facility was replaced for $85,500. The old air conditioning system had a cost of $73,750 and a book value of $1,900. The old air conditioning system had no scrap value. June 29 Annual maintenance of $37,000 was performed. Sept. 12 The roof of the old manufacturing facility is replaced at a cost of $64,250. This expenditure substantially extended the life of the facility. Dec. 28 A new wing was added to the manufacturing facility at a cost of $265,000. This expenditure substantially increased the productive capacity of the plant. Required: 1. Prepare journal entries to record McClain’s expenditures for 2019. 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 b. annual maintenance expenditures CHART OF…
McClain Company incurred the following expenditures during 2019: Apr. 9 The air conditioning system in the old manufacturing facility was replaced for $80,000. The old air conditioning system had a cost of $71,750 and a book value of $1,700. The old air conditioning system had no scrap value. June 29 Annual maintenance of $39,500 was performed. Sept. 12 The roof of the old manufacturing facility is replaced at a cost of $68,000. This expenditure substantially extended the life of the facility. Dec. 28 A new wing was added to the manufacturing facility at a cost of $261,000. This expenditure substantially increased the productive capacity of the plant. Required: 1. Prepare journal entries to record McClain’s expenditures for 2019. 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 b. annual maintenance expenditures
McClain Company incurred the following expenditures during 2019: Apr. 9 The air conditioning system in the old manufacturing facility was replaced for $83,000. The old air conditioning system had a cost of $74,000 and a book value of $2,000. The old air conditioning system had no scrap value. June 29 Annual maintenance of $38,000 was performed. Sept. 12 The roof of the old manufacturing facility is replaced at a cost of $65,000. This expenditure substantially extended the life of the facility. Dec. 28 A new wing was added to the manufacturing facility at a cost of $275,000. This expenditure substantially increased the productive capacity of the plant.
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. On November 15, 2021, Trade Company made payments for the following expenditures: Replacement parts for overhaul of machine 550,000 Labor and overhead in connection with overhaul 140,000 Continuing, frequent and low cost repairs 150,000 Replacement of broken gear of machine 50,000 1. The overhaul resulted in a significant increase in production. 2. the journal entry to record the expenditure to be capitalized would be
Stacey Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of 2021, an asset account for the company showed the following balances: Manufacturing equipment Accumulated depreciation through 2020 $95,400 60,000 In early January 2021, the following expenditures were incurred for repairs and maintenance: Routine maintenance and repairs on the equipment Major overhaul of the equipment 910 11,100 The equipment is being depreciated on a straight-line basis over an estimated life of 15 years, with a $5,400 estimated residual value. The company's fiscal year ends on December 31. Required: 1. Calculate the depreciation expense for the manufacturing equipment for 2020. Depreciation expense 2. Prepare the journal entries to record the two expenditures that occurred during 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet…
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