Question

McClain Company incurred the following expenditures during 2016:
Apr. 9 The air conditioning system in the old manufacturing codify was replaced for $83,000. The old air conditioning system had a cost of $74,000 and a book value of $2,000. The old air conditioning system had no scrap value.
June 29 Annual maintena nee of $38,000 was performed.
Sept. 12 The roof of the old manufacturing facility is replaced at a cost of $65,000. This expenditure substantially extended the life of the facility.
Dec. 28 A new wing was added to the manufacturing facility at a cost of $275,000. This expenditure substantially increased the productive capacity of the plant.
Required:
1. Prepare journal entries to record McClain's expenditures for 2016.
2. Next Level What is the effect on the financial statements if management had improperly accounted for the:
a. addition of the new wing to the manufacturing facility
b. annual maintenance expenditures


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  • CreatedOctober 05, 2015
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