McClain Company incurred the following expenditures during 2019:Apr.9The air conditioning system in the old manufacturing facility was replaced for $80,000. The old air conditioning system had a cost of $71,750 and a book value of $1,700. The old air conditioning system had no scrap value.June29Annual maintenance of $39,500 was performed.Sept.12The roof of the old manufacturing facility is replaced at a cost of $68,000. This expenditure substantially extended the life of the facility.Dec.28A new wing was added to the manufacturing facility at a cost of $261,000. This expenditure substantially increased the productive capacity of the plant. Required:1.Prepare journal entries to record McClain’s expenditures for 2019.2.Next Level What is the effect on the financial statements if management had improperly accounted for the:a. addition of the new wing to the manufacturing facilityb. annual maintenance expenditures

Journal entries are the initial steps of accounting process. Once the journals are made, the…

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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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McClain Company incurred the following expenditures during 2019:

Apr.	9	The air conditioning system in the old manufacturing facility was replaced for $80,000. The old air conditioning system had a cost of $71,750 and a book value of $1,700. The old air conditioning system had no scrap value.
June	29	Annual maintenance of $39,500 was performed.
Sept.	12	The roof of the old manufacturing facility is replaced at a cost of $68,000. This expenditure substantially extended the life of the facility.
Dec.	28	A new wing was added to the manufacturing facility at a cost of $261,000. This expenditure substantially increased the productive capacity of the plant.

Required:

Prepare journal entries to record McClain’s expenditures for 2019.

Next Level What is the effect on the financial statements if management had improperly accounted for the:

a.	addition of the new wing to the manufacturing facility
b.	annual maintenance expenditures

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