Eckan Word Processing Service Uses the Straight-Line Method of Depreciation

question 18

Essay

Eckan Word Processing Service uses the straight-line method of depreciation. The company's fiscal year end is December 31. The following transactions and events occurred during the first three years.
2013 July 1 Purchased a computer from the Computer Center for $1,900 cash plus sales tax of $150, and shipping costs of $50.
Nov. 3 Incurred ordinary repairs on computer of $140.
Dec. 31 Recorded 2013 depreciation on the basis of a four year life and estimated residual value of $500.
2014 Dec. 31 Recorded 2014 depreciation.
2015 Jan. 1 Paid $300 for an upgrade of the computer. This expenditure is expected to increase the operating efficiency and capacity of the computer.
Instructions
Prepare the necessary entries. (Show computations.)

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Definitions:

Financial Institutions

are establishments that provide financial services to its clients or members, including banks, credit unions, insurance companies, and investment firms.

Reserve

Assets held back or saved for future use or to meet unforeseen needs, often referring to banks' reserves of cash.

Demand Deposits

Money in bank accounts that can be withdrawn "on demand" without any advance notice.

Junk Bonds

High-yield bonds that carry a higher risk of default compared to investment-grade bonds, typically issued by companies with lower credit ratings.