41. (2 points) For each of the items below, prepare the appropriate entry. 1.A m

Question

41. (2 points) For each of the items below, prepare the appropriate entry.

1.A motor in one of Excel’s trucks was overhauled at a cost of $2,500. Excel expects this overhaul will make the truck operated on a more efficient basis, i.e., the truck will get better gas mileage.

2.James, a maintenance worker at Excel, spent the entire week unloading and setting up a new machine in Excel’s factory. James’ earned $1,500 that week, however, James will not be paid until the following week. (Do not worry about any withholdings from James’ pay.)

3.Excel incurred and paid $1,600 for ordinary repairs on one of its machines.

4.Excel incurred and paid $10,000 for adjustments to one of its machines. The adjustments will increase the useful life of the machine.

Explanation / Answer

Journal entries:

1. Motor Vehicle A/c $2500 Dr

To Cash/Bank $2500Cr

(Being the motor vehicle capitalized.)

2. No Entry required(Since the amount is not paid, the entry can be passed when amount is paid)

or

Profit & loss a/c $ 1500 Dr

To Maintenence work a/c $1500 Cr

(Being the amount due entry passed)

3. Profit & Loss A/c $1600 Dr

To Machinery Repairs $1600 Cr

(Being the machinery expenses charged to P&L a/c)

4. Machinery A/c $10000 Dr

To Cash/Bank $10000 Cr

(Being the amount paid to adjustment of machinery capitalised)

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