[The following information applies to the questions displayed below.) Hulme Comp

Question

[The following information applies to the questions displayed below.) Hulme Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of 2017, an asset account for the company showed the following balances: Manufacturing equipment Accumulated depreciation through 2016 $ 136,000 56,000 During 2017, the following expenditures were incurred for the equipment: Routine maintenance and repairs on the equipment Major overhaul of the equipment that improved efficiency on January 2, 2017 $900 5,000 The equipment is being depreciated on a straight-line basis over an estimated life of 17 years with a $17,000 estimated residual value. The annual accounting period ends on December 31.

Explanation / Answer

3) Journal Entries (Amounts in $)

Transaction General Journal Debit Credit 1) Repairs and Maintenance Expense 900 Cash 900 (To record the repairs and maintenance exp.) 2) Manufacturing Equipment 5,000 Cash 5,000 (To record the expenditure for the major overhaul of the equipment)

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