At the end of 2011, Spindle Works Inc. owned a piece of equipment that had originally cost $21,000. It was being depreciated by the straight-line method, and had $8,500 of accumulated depreciation recorded as of the end of 2011 after the yearly depreciation was recorded.
At the beginning of 2012, the equipment was extensively refurbished at a cost of $9,500. As a result of this work, the productivity of the equipment was significantly improved, its total estimated useful life was increased from 10 to 14 years, and its residual value was increased from $4,000 to $7,000.
Required:
a. Calculate the age of the equipment at the end of 2011.
b. Give the journal entry to record the refurbishment of the equipment at the beginning of 2012.
c. Give the adjusting entry to record the depreciation of the equipment at the end of 2012.