Question

Bird Manufacturing paid $62,000 to purchase a computerized assembly machine on January 1, 2013. The machine had an estimated life of eight years and a $2,000 salvage value. Bird’s financial condition as of January 1, 2016, is shown in the following financial statements model. Bird uses the straight-line method for depreciation.


Bird Manufacturing made the following expenditures on the computerized assembly machine in 2016:
Jan. 2 Added an overdrive mechanism for $8,000 that would improve the overall quality of the performance of the machine but would not extend its life. The salvage value was revised to $2,500.
Aug. 1 Performed routine maintenance, $1,250.
Oct. 2 Replaced some computer chips (considered routine), $800.
Dec. 31 Recognized 2016 depreciation expense.

Required
a. Record the 2016 transactions in a statements model like the preceding one.
b. Prepare journal entries for the 2016transactions.


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  • CreatedOctober 26, 2013
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