Question: Oki Company pays 264 000 for equipment expected to last
Oki Company pays $ 264,000 for equipment expected to last four years and have a $ 29,000 salvage value. Prepare journal entries to record the following costs related to the equipment. 1. During the second year of the equipment’s life, $ 22,000 cash is paid for a new component expected to increase the equipment’s productivity by 10% a year. 2. During the third year, $ 6,250 cash is paid for normal repairs necessary to keep the equipment in good working order. 3. During the fourth year, $ 14,870 is paid for repairs expected to increase the useful life of the equipment from four to five years.
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