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Item 4

E9-4 (Algo) Recording Straight-Line Depreciation and Repairs [LO 9-2, LO 9-3]

Wiater Company operates a small manufacturing facility. On January 1, 2021, an asset account for the company showed the following balances:

Equipment	$ 244,000
Accumulated Depreciation (beginning of the year)	152,000

During the first week of January 2021, the following cash expenditures were incurred for repairs and maintenance:

Routine maintenance and repairs on the equipment	$ 2,650
Major overhaul of the equipment that improved efficiency	32,000

The equipment is being depreciated on a straight-line basis over an estimated life of 15 years with a $16,000 estimated residual value. The annual accounting period ends on December 31.

Required:

Indicate the effects (accounts, amounts, and + for increase and for decrease) of the following two items on the accounting equation, using the headings shown below. (Enter any decreases to Assets, Liabilities or Stockholder's Equity with a minus sign.)

1. The adjustment for depreciation made last year at the end of 2020.

2. The two expenditures for repairs and maintenance during January 2021.