Question: The Cummings Company charged various expenditures made during 20

The Cummings Company charged various expenditures made during 2011 to an account called repairs and maintenance expense. You have been asked by your supervisor in the company's internal audit department to review the expenditures to determine if they were appropriately recorded. The amount of each of the transactions included in the account is considered material.
1. Engine tune-up and oil change on the company's 12 delivery trucks—$1,300.
2. Rearrangement of machinery on the main production line—$5,500. It is not evident that the rearrangement will increase operational efficiency.
3. Installation of aluminum siding on the manufacturing plant—$32,000.
4. Replacement of the old air conditioning system in the manufacturing plant with a new system— $120,000.
5. Replacement of broken parts on three machines—$1,500.
6. Annual painting of the manufacturing plant—$11,000.
7. Purchase of new forklift to move finished product to the loading dock—$6,000.
8. Patching leaks in the roof of the manufacturing plant—$6,500. The repair work did not extend the useful life of the roof.

For each of the transactions listed above, indicate whether the expenditure is appropriately charged to the repair and maintenance expense account, and if not, indicate the proper account to be charged.

Sale on SolutionInn
  • CreatedJuly 02, 2013
  • Files Included
Post your question