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29 October, 09:01

Belltone Company made the following expenditures related to its 10-year-old manufacturing facility:

1. The heating system was replaced at a cost of $205,000. The cost of the old system was not known. The company accounts for improvements as reductions of accumulated depreciation.

2. A new wing was added at a cost of $780,000. The new wing substantially increases the productive capacity of the plant.

3. Annual building maintenance was performed at a cost of $15,500.

4. All of the machinery on the assembly line in the plant was rearranged at a cost of $42,000. The rearrangement clearly increases the productive capacity of the plant. Required: Prepare journal entries to record each of the above expenditures. (If no entry is required for a particular event, select "No journal entry required" in the first account field.)

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  1. 29 October, 09:14
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    Acc dep - manufacturing facility 205,000 debit

    Cash 205,000 credit

    --to record cost heating system--

    Wing 780,000 debit

    Cash 780,000 credit

    --to reocrd addition of a new wing--

    maintenance expense 15,500 debit

    cash 15,500 credit

    --to record maintenance expense for the period

    Assembly line 42,000 debit

    Cash 42,000 credit

    --to record new assembly line--

    Explanation:

    1. - the improvements will decrease the accumulated depreciation

    2. - The wing will be considered a new asset and depreciate separately

    3. - the maintenance cost is cost of the period as it do not upgrade or change the productivity is a cost to maintain the current level.

    4. - the assembly line will be reocgnize as an asset as increase the productive capaictive of the plant
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