Financial Accounting
9th Edition
ISBN: 9781259222139
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 8, Problem 8.6E
Recording
LO8-2, 8-3 Manrow Growers, Inc., owns equipment for sowing and harvesting its organic fruit, vegetables, and tree nuts that are sold to local restaurants and grocery stores. At the beginning of 2016, an asset account for the company showed the following balances:
| Equipment | $350,000 |
| 132,000 |
During 2016, the following expenditures were incurred for the equipment:
| Routine maintenance and repairs on the equipment | $ 5,000 |
| Major overhaul of the equipment that improved efficiency on January 1, 2016 | 42,000 |
The equipment is being depreciated on a straight-line basis over an estimated life of 10 years with a $20,000 estimated residual value. The annual accounting period ends on December 31.
Required:
- 1. Give the
adjusting entry that was made at the end of 2015 for depreciation on the equipment. - 2. Starting at the beginning of 2016, what is the remaining estimated life?
- 3. Give the
journal entries to record the two expenditures during 2016.
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Chapter 8 Solutions
Financial Accounting
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