Chec 6 Oki Company pays $264,000 for equipment expected to last four years and h

Question

Chec 6 Oki Company pays $264,000 for equipment expected to last four years and have a $29,000 salvage value. Prepare journal entries to record the following costs related to the equipment. points 1. During the second year of the equipment's life, $22,000 cash is paid for a new component expected to increase the equipment's productivity by 10% a year 2. During the third year, $6,250 cash is paid for normal repairs necessary to keep the equipment in good working order ebook 3. During the fourth year, $14,870 is paid for repairs expected to increase the useful life of the equipment from four to five years.

Explanation / Answer

Journal entry :

D

Date accounts & explanation debit credit Equipment 22000     Cash 22000 (To record new component) Repairs and maintenance 6250      Cash 6250 (To record repairs and maintenance) Equipment 14870      Cash 14870 (To record repairs)

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