On April 1, 2019, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $61,200, has an nine-year useful life, and has no residual value. The company uses the straight-line depreciation method for all manufacturing equipment. On January 4, 2021, $15,150 was spent to repair the equipment and to add a feature that increased its operating efficiency. Of the total expenditure, $3,400 represented ordinary repairs and annual maintenance and $11,750 represented the cost of the new feature. In addition to increasing operating efficiency, the total useful life of the equipment was extended to 11 years. Required: 1. Prepare journal entries for the depreciation for 2019 and 2020. 2. Prepare journal entries for the 2021 expenditure. 3. Prepare journal entries for the depreciation for 2021.
On April 1, 2019, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $61,200, has an nine-year useful life, and has no residual value. The company uses the straight-line depreciation method for all manufacturing equipment. On January 4, 2021, $15,150 was spent to repair the equipment and to add a feature that increased its operating efficiency. Of the total expenditure, $3,400 represented ordinary repairs and annual maintenance and $11,750 represented the cost of the new feature. In addition to increasing operating efficiency, the total useful life of the equipment was extended to 11 years. Required: 1. Prepare journal entries for the depreciation for 2019 and 2020. 2. Prepare journal entries for the 2021 expenditure. 3. Prepare journal entries for the depreciation for 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On April 1, 2019, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $61,200, has
an nine-year useful life, and has no residual value. The company uses the straight-line depreciation method for all manufacturing
equipment.
On January 4, 2021, $15,150 was spent to repair the equipment and to add a feature that increased its operating efficiency. Of the total
expenditure, $3,400 represented ordinary repairs and annual maintenance and $11,750 represented the cost of the new feature. In
addition to increasing operating efficiency, the total useful life of the equipment was extended to 11 years.
Required:
1. Prepare journal entries for the depreciation for 2019 and 2020.
2. Prepare journal entries for the 2021 expenditure.
3. Prepare journal entries for the depreciation for 2021.
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