Question

Check my work On April 1, 2016, the KB Toy Company purchased equipment to be used in its manufacturing process. The equipment cost $61,200, has an nine-year useful life, and has no residual value. The company uses the straight-line depreciation method for all manufacturing equipment. kipped eBook Print Ferences On January 4, 2018, $15,150 was spent to repair the equipment and to add a feature that increased its operating efficiency. Of the total expenditure, $3,400 represented ordinary repairs and annual maintenance and $11,750 represented the cost of the new feature. In addition to increasing operating efficiency, the total useful life of the equipment was extended to 11 years. Required: 1. Prepare journal entries for the depreciation for 2016 and 2017. 2. Prepare journal entries for the 2018 expenditure. 3. Prepare journal entries for the depreciation for 2018.

Answer 1

1	Date	General Journal	Debit	Credit
	Dec 31, 2016	Depreciation expense	$5,100
		Accumulated depreciation—Equipment		$5,100
		($61,200/9 years x 9/12)
	Dec 31, 2017	Depreciation expense	$6,800
		Accumulated depreciation—Equipment		$6,800
		($61,200/9 years)
2	Date	General Journal	Debit	Credit
	Jan 4, 2018	Repair expense	$3,400
		Equipment	$11,750
		Cash		$15,150
	Date	General Journal	Debit	Credit
3	Dec 31, 2018	Depreciation expense	$6,600
		Accumulated depreciation—Equipment		$6,600
	Working
		Cost	$61,200
		Less: Accumulated Depreciation	$11,900
		($5,100 + $6,800)
			$49,300
		Add: Addition to equipment	$11,750
			$61,050
		New life (11 years - 1.75 years)	9.25 years
		Depreciation per year	$6,600