Formula Results Signed a 10-Year Lease for a Store in the Best

question 57

Essay

Formula Results signed a 10-year lease for a store in the best mall in the area.At the beginning of the seventh year of the lease,the company decided to refurbish the store.The following expenditures were made:
$$\begin{array} { l l l } \text { Item } & \underline { \text { Cost } } & \underline { \text { Useful } } \text { Life } \\\text { Carpeting } & \$ 6,000 & 3 \text { years } \\\text { Lighting Fixtures } & \$ 4,500 & 6 \text { years } \\\text { Wall Construction } & \$ 10,000 & \text { 8years }\end{array}$$ All items were paid in cash.There is no residual value for any of the items noted above.
a.Prepare the journal entry to record the expenditures of the above items.
b.Prepare the year-end adjustment to record the expense associated with the above items.

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Definitions:

Labor Constraint

A limitation or restriction on the workforce, which can affect production capacity and project timelines.

Net Profit

The financial gain after all expenses, taxes, and costs have been subtracted from total revenue.

Gaming Consoles

Electronic devices designed specifically for playing video games that can be connected to a television or other display media.

Labor Hours

The total number of hours worked by employees within a specific time period, often used to measure productivity or to calculate labor costs.