The Entry to Record the Payment of an Extraordinary Repair

question 112

Multiple Choice

The entry to record the payment of an extraordinary repair of $5,000 that will extend the life of the machine 5 years,when the machine cost $30,000,and has accumulated depreciation of $26,000,is to:

• A)debit Machinery $5,000;credit Accumulated Depreciation $5,000.
• B)debit Accumulated Depreciation $5,000;credit Cash $5,000.
• C)debit Accumulated Depreciation $1,000;credit Cash $1,000.
• D)debit Machinery $1,000;credit Cash $1,000.

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Definitions:

Accounting Break-even

The point at which a company's revenues exactly cover its expenses, leading to a net income of zero.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and hourly labor.

Proposed Project

A plan or proposal for a course of action, especially in a business or scientific context.

Fixed Costs

Costs that do not fluctuate with changes in production volume or sales, such as rent, salaries, and insurance.