FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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 $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
 
 
 
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