Question

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

1. The heating system was replaced at a cost of $250,000. 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 $750,000. The new wing substantially increases the productive capacity of the plant.
3. Annual building maintenance was performed at a cost of $14,000.
4. All of the equipment on the assembly line in the plant was rearranged at a cost of $50,000. The rearrangement clearly increases the productive capacity of the plant.

Prepare journal entries to record each of the above expenditures.

Answer 1

Answer:

The journal entries are as follows:

(1) Accumulated depreciation - Building A/c Dr. $250,000

                To Cash                                                                  $250,000

(To record the replacement of heating system)

(2) Building A/c Dr. $750,000

          To cash                        $750,000

(To record the new wing)

(3) Maintenance expense A/c Dr. $14,000

                To cash                                       $14,000

(To record the maintenance expense)

(4) Equipment A/c Dr. $50,000

           To cash                          $50,000

(To record the new equipment)