Part 1. 

A company pays $1,000 for equipment expected to last four years and have a $200 salvage value. Prepare journal entries to record the following costs related to the equipment.

a. During the second year of the equipment’s life, $400 cash is paid for a new component expected to materially increase the equipment’s productivity.

b. During the third year, $250 cash is paid for normal repairs necessary to keep the equipment in good working order.

c. During the fourth year, $500 is paid for repairs expected to increase the useful life of the equipment from four to five years.
Part 2. 

A company owns a machine that cost $500 and has accumulated depreciation of $400. Prepare the entry to record the disposal of the machine on January 2 in each separate situation.

a. The company disposed of the machine, receiving nothing in return.

b. The company sold the machine for $80 cash.

c. The company sold the machine for $100 cash.

d. The company sold the machine for $110 cash.