Exercise 10-14 Ordinary repairs, extraordinary repairs, and betterments LO C3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Exercise 10-14: Ordinary Repairs, Extraordinary Repairs, and Betterments (LO C3)**
**Scenario:**
Oki Company pays $253,600 for equipment expected to last four years and has a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment.
1. Paid $23,400 cash for a new component that increased the equipment's productivity.
2. Paid $5,850 cash for minor repairs necessary to keep the equipment working well.
3. Paid $16,350 cash for significant repairs to increase the useful life of the equipment from four to seven years.
**Journal Entry Worksheet:**
The worksheet includes fields for transaction data with columns for:
- Description (Transaction)
- General Journal
- Debit
- Credit
Instructions: Record the cost of minor repairs of $5,850 paid in cash to keep the equipment working well.
**Note:** Enter debits before credits.
Actions Available:
- Record entry
- Clear entry
- View general journal
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**Explanation:**
This exercise provides an example of how financial entries are recorded for equipment-related expenses to maintain, enhance, or extend its productivity and lifespan. The costs are categorized into betterments (enhancements) and repairs (both ordinary and extraordinary) and need to be appropriately journaled.

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### Exercise 10-14 Ordinary Repairs, Extraordinary Repairs, and Betterments LO C3
**Scenario:**
Oki Company pays $253,600 for equipment expected to last four years and have a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment.
1. Paid $23,400 cash for a new component that increased the equipment's productivity.
2. Paid $5,850 cash for minor repairs necessary to keep the equipment working well.
3. Paid $16,350 cash for significant repairs to increase the useful life of the equipment from four to seven years.
**Instructions:**
- Use the journal entry worksheet provided below to record each transaction.
**Journal Entry Worksheet:**
- **Transaction:** Fill in the details as appropriate for each transaction number.
- **General Journal:** Input the transaction details where applicable.
- **Debit/Credit:** Enter the corresponding amounts in the Debit or Credit columns.
(Note: Enter debits before credits.)
**Worksheet Interface:**
- "Record entry" button to save your input.
- "Clear entry" button to reset the current entry.
- "View general journal" allows you to review the saved entries.
---
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