Mark's Repair Service Uses the Straight-Line Method of Depreciation

question 58

Essay

Mark's Repair 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 equipment from the Equipment Center for $5,500 cash plus sales tax of $305, and shipping costs of $250.
Nov. 3 Incurred ordinary repairs on computer of $240.
Dec. 31 Recorded 2013 depreciation on the basis of a four-year life and estimated salvage value of $455
2014 Dec. 31 Recorded 2014 depreciation.
2015 Jan. 1 Paid $1,800 for a major upgrade of the equipment. This expenditure is expected to increase the operating efficiency and capacity of the equipment.
Instructions
Prepare the necessary entries. (Show computations.)

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Definitions:

Contracts

Legal agreements between two or more parties that are enforceable by law.

Invitation

An offer that suggests or requests someone's presence or participation, typically in an event or activity.

Offer

An expression of willingness to enter into a contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.

Negotiate

The process of discussing and reaching a mutual agreement between parties with different interests.