Stacey Company operates a small manufacturing facility as asupplement to its regular service activities. At the beginning of2021, an asset account for the company showed the followingbalances:
|
| Manufacturing equipment | $ | 66,900 | |
| Accumulated depreciation through 2020 | | 52,000 | |
|
In early January 2021, the following expenditures were incurredfor repairs and maintenance:
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| Routine maintenance and repairs on the equipment | $ | 860 | |
| Major overhaul of the equipment | | 10,600 | |
|
The equipment is being depreciated on a straight-line basis overan estimated life of 12 years, with a $4,500 estimated residualvalue. The company’s fiscal year ends on December 31.
Required:
1. Calculate the depreciation expense for the manufacturingequipment for 2020.
2. Prepare the journal entries to record the two expendituresthat occurred during 2021. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)
3. Prepare the adjusting entry at December 31, 2021, to recordthe depreciation of the manufacturing equipment, assuming no changein the estimated life or residual value of the equipment.(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.)
4. Indicate the accounts affected and the amount of the effectsof the journal entries you prepared for (1) to (3) on theaccounting equation. (Enter any decreasesto account balances with a minussign.)
