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1 September, 19:39

Oki Company pays $264,350 for equipment expected to last four years and have a $30,000 salvage value. Prepare journal entries to record the following costs related to the equipment. Paid $16,150 cash for a new component that increased the equipment's productivity. Paid $4,038 cash for minor repairs necessary to keep the equipment working well. Paid $9,100 cash for significant repairs to increase the useful life of the equipment from four to seven years.

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  1. 1 September, 20:03
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    a. Debit Equipment with $16,150; and Credit Cash also with $16,150.

    b. Debit Repair expenses with $4,038; and Credit Cash also with $4,038.

    a. Debit Equipment with $9,100; and Credit Cash also with $9,100.

    Explanation:

    a. Paid $16,150 cash for a new component that increased the equipment's productivity.

    Details Dr ($) Cr ($)

    Equipment 16,150

    Cash 16,150

    To record purchase of a new component that increased the equipment's productivity

    b. Paid $4,038 cash for minor repairs necessary to keep the equipment working well.

    Details Dr ($) Cr ($)

    Repair expenses 4,038

    Cash 4,038

    To record payment for minor equipment repair.

    c. Paid $9,100 cash for significant repairs to increase the useful life of the equipment from four to seven years.

    Details Dr ($) Cr ($)

    Equipment 9,100

    Cash 9,100

    To record significant repairs of equipment that increased its useful life form 4 to 7 years.
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