Wiater Company operates a small manufacturing facility. On January 1, 2015, an a

Question

Wiater Company operates a small manufacturing facility. On January 1, 2015, an asset account for the company showed the following balances: Equipment Accumulated Depreciation (beginning of the year)100,000 $160,000 During the first week of January 2015, the following expenditures were incurred for repairs and maintenance Routine maintenance and repairs on the equipment Major overhaul of the equipment that improved efficiency $1,850 24,000 The equipment is being depreciated on a straight-line basis over an estimated life of 15 years with a Required: 1. Prepare the adjusting journal entry that would have been made at the end of 2014 for depreciation orn the manufacturing equipment. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Explanation / Answer

Req 1: Cost of Equipment: $ 160,000 Salvage : $ 10,000 Life: 15 years Annual Depreciation (Cost-Salvage)/Life: (160,000-10000)/15 = $ 10,000 Journal entry for Depreciation in 2014: Dec 31 2014 Depreciation expense Dr. 10000       Accumulated depreciation 10000 Req 2: Accumulated depreciation: 100,000 Annual depreciation: 10,000 Depreciation charged for 10 years Total Life of Equipment 15 years Remaining life of equipment 5 years Req 3: Journal entry: For ordinary repairss: Repairs expense Account Dr. 1850       Cash Account 1850 For Extraordinary repairs: Equipment Account Dr. 24000       Cash Account 24000

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