Question

oki company pays $284,750 for equipment expected to last four years and have a $30,000 salvage value. prepare journal entries to record the following costs related to the equipment.

1. paid $17,800 cash for a new component that increased the equipments productivity.
2. paid $4,450 cash for minor repairs necessary to keep the equipment working well.
3. paid $10,750 cash for significant repairs to increase the useful life of the equipment from four to seven years.

view transaction list
journal entry worksheet
< a b c
record the betterment cost of $17,800 paid in cash.
note: enter debits before credits
transaction general journal debit credit

Explanation:

Step1: Record better - ment cost

A better - ment cost increases the productivity of the asset. So, we debit the Equipment account and credit the Cash account.

General Journal	Debit	Credit
Cash		$17,800

Step2: Record minor repair cost

Minor repairs are revenue expenditures and are expensed immediately. We debit the Repairs and Maintenance Expense account and credit the Cash account.

General Journal	Debit	Credit
Cash		$4,450

Step3: Record significant repair cost

Significant repairs that increase the useful life of the asset are capital expenditures. We debit the Equipment account and credit the Cash account.

General Journal	Debit	Credit
Cash		$10,750

Answer:

Transaction	General Journal	Debit	Credit
	Cash		$17,800
2	Repairs and Maintenance Expense	$4,450
	Cash		$4,450
3	Equipment	$10,750
	Cash		$10,750