Wiater Company operates a small manufacturing facility. On January 1, 2021, an asset account for the company showedthe following balances:EquipmentAccumulated Depreciation (beginning of the year)During the first week of January 2021, the following cash expenditures were incurred for repairs and maintenance:Routine maintenance and repairs on the equipment$ 3,35039,000Major overhaul of the equipment that improved efficiency$ 331,000229,500The equipment is being depreciated on a straight-line basis over an estimated life of 20 years with a $25,000 estimatedresidual value. The annual accounting period ends on December 31.Required:Indicate the effects (accounts, amounts, and + for increase and - for decrease) of the following two items on theaccounting equation, using the headings shown below. (Enter any decreases to Assets, Liabilities or Stockholder'sEquity with a minus sign.)1. The adjustment for depreciation made last year at the end of 2020.2. The two expenditures for repairs and maintenance during January 2021.

The adjustment for the depreciation for a particular year is the adjustment which is required to be…

Answered: 1. The adjustment for depreciation made…

1. The adjustment for depreciation made last year at the end of 2020. 2. The two expenditures for repairs and maintenance during January 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Wiater Company operates a small manufacturing facility. On January 1, 2021, an asset account for the company showed
the following balances:
Equipment
Accumulated Depreciation (beginning of the year)
During the first week of January 2021, the following cash expenditures were incurred for repairs and maintenance:
Routine maintenance and repairs on the equipment
$ 3,350
39,000
Major overhaul of the equipment that improved efficiency
$ 331,000
229,500
The equipment is being depreciated on a straight-line basis over an estimated life of 20 years with a $25,000 estimated
residual value. The annual accounting period ends on December 31.
Required:
Indicate the effects (accounts, amounts, and + for increase and - for decrease) of the following two items on the
accounting equation, using the headings shown below. (Enter any decreases to Assets, Liabilities or Stockholder's
Equity with a minus sign.)
1. The adjustment for depreciation made last year at the end of 2020.
2. The two expenditures for repairs and maintenance during January 2021.

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