On April 1, 2019, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $48,000, has an eight-year useful life, and has no residual value. The company uses the straightline depreciation method for all manufacturing equipment. On January 4, 2021, $12,350 was spent to repair the equipment and to add a feature that increased its operating efficiency. Of the total expenditure, $2,000 represented ordinary repairs and annual maintenance and $10,350 represented the cost of the new feature. In addition to increasing operating efficiency, the total useful life of the equipment was extended to 10 years.Required:Prepare journal entries for the following:1. Depreciation for 2019 and 2020.2. The 2021 expenditure.3. Depreciation for 2021.
On April 1, 2019, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $48,000, has an eight-year useful life, and has no residual value. The company uses the straightline depreciation method for all manufacturing equipment. On January 4, 2021, $12,350 was spent to repair the equipment and to add a feature that increased its operating efficiency. Of the total expenditure, $2,000 represented ordinary repairs and annual maintenance and $10,350 represented the cost of the new feature. In addition to increasing operating efficiency, the total useful life of the equipment was extended to 10 years.Required:Prepare journal entries for the following:1. Depreciation for 2019 and 2020.2. The 2021 expenditure.3. Depreciation for 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On April 1, 2019, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $48,000, has an eight-year useful life, and has no residual value. The company uses the straightline
Required:
Prepare
1. Depreciation for 2019 and 2020.
2. The 2021 expenditure.
3. Depreciation for 2021.
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