Noxon, Inc., repaired a piece of equipment at a cost of $3,000, which Noxon, Inc., paid in cash. Noxon, Inc., erroneously capitalized this cost as part of the cost of the equipment.

Requirements

1. Journalize both the incorrect entry the accountant made to record this transaction and the correct entry that the accountant should have made.

2. How will this accounting error affect Noxon, Inc.'s net income? Ignore depreciation?