Manrow Growers, Inc., owns equipment for sowing and harvesting its organic fruit, vegetables, and tree nuts that
Question:
Manrow Growers, Inc., owns equipment for sowing and harvesting its organic fruit, vegetables, and tree nuts that are sold to local restaurants and grocery stores. At the beginning of 2019, an asset account for the company showed the following balances:
Equipment ................................................................... $350,000
Accumulated depreciation through 2018 .................. 165,000
During 2019, the following expenditures were incurred for the equipment:
Major overhaul of the equipment on January 1, 2019, that improved efficiency ................. $42,000
Routine maintenance and repairs on the equipment .................................................................. 5,000
The equipment is being depreciated on a straight-line basis over an estimated life of eight years with a $20,000 estimated residual value. The annual accounting period ends on December 31.
Required:
1. Give the adjusting entry that was made at the end of 2018 for depreciation on the equipment.
2. Starting at the beginning of 2019, what is the remaining estimated life?
3. Give the journal entries to record the two expenditures during 2019.
Step by Step Answer:
Financial Accounting
ISBN: 978-1259964947
10th edition
Authors: Robert Libby, Patricia Libby, Frank Hodge