Hulme Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of the current year, an asset account for the company showed the following balances: Manufacturing equipment $ 144,000 Accumulated depreciation through the end of last year 72,000 During the current year, the following expenditures were incurred for the equipment: Major overhaul of the equipment on January 2 the current year that improved efficiency $ 17,000 Routine repairs on the equipment 1,400 The equipment is being depreciated on a straight-line basis over an estimated life of 20 years with a $14,000 estimated residual value. The annual accounting period ends on December 31. Required: Indicate the effects of the following on the accounting equation. Note: Enter decreases to account categories as negative amounts and do not round your intermediate calculations. 1. The adjustment for depreciation at the end of last year. 2. The two expenditures during the current year for (a) the major overhaul of the equipment and (b) repairs and maintenance. Event 1. Adjustment for Depreciation 1. Adjustment for Depreciation 2a. Major overhaul of equipment 2a. Major overhaul of equipment 2a. Major overhaul of equipment 2b. Repairs and maintenance 2b. Repairs and maintenance Assets Accumulated depreciation Cash Equipment Cash Liabilities Stockholders' Equity +Depreciation expense + +Repairs expense
Hulme Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of the current year, an asset account for the company showed the following balances: Manufacturing equipment $ 144,000 Accumulated depreciation through the end of last year 72,000 During the current year, the following expenditures were incurred for the equipment: Major overhaul of the equipment on January 2 the current year that improved efficiency $ 17,000 Routine repairs on the equipment 1,400 The equipment is being depreciated on a straight-line basis over an estimated life of 20 years with a $14,000 estimated residual value. The annual accounting period ends on December 31. Required: Indicate the effects of the following on the accounting equation. Note: Enter decreases to account categories as negative amounts and do not round your intermediate calculations. 1. The adjustment for depreciation at the end of last year. 2. The two expenditures during the current year for (a) the major overhaul of the equipment and (b) repairs and maintenance. Event 1. Adjustment for Depreciation 1. Adjustment for Depreciation 2a. Major overhaul of equipment 2a. Major overhaul of equipment 2a. Major overhaul of equipment 2b. Repairs and maintenance 2b. Repairs and maintenance Assets Accumulated depreciation Cash Equipment Cash Liabilities Stockholders' Equity +Depreciation expense + +Repairs expense
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Depreciation) LO8-2, 8-3
Hulme Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of the
current year, an asset account for the company showed the following balances:
Manufacturing equipment
$ 144,000
Accumulated depreciation through the end of last
year
72,000
During the current year, the following expenditures were incurred for the equipment:
Major overhaul of the equipment on January 2 the current year that improved efficiency $ 17,000
Routine repairs on the equipment
1,400
The equipment is being depreciated on a straight-line basis over an estimated life of 20 years with a $14,000 estimated residual value.
The annual accounting period ends on December 31.
Required:
Indicate the effects of the following on the accounting equation.
Note: Enter decreases to account categories as negative amounts and do not round your intermediate calculations.
1. The adjustment for depreciation at the end of last year.
2. The two expenditures during the current year for (a) the major overhaul of the equipment and (b) repairs and maintenance.
Event
Assets
Accumulated depreciation
1. Adjustment for Depreciation
1. Adjustment for Depreciation
2a. Major overhaul of equipment
2a. Major overhaul of equipment
2a. Major overhaul of equipment
2b. Repairs and maintenance
2b. Repairs and maintenance
Cash
Equipment
Cash
Liabilities
Stockholders' Equity
+Depreciation expense
+
+Repairs expense
+
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