Patterson Company pays $262,500 for equipment expected to last four
years and have a $30,000 salvage value. Prepare journal entries to
record the following costs related to the equipment.
Required:
1. During the second year of the equipment’s life, $21,000
cash is paid for a new component expected to increase the equipment’s
productivity by 10% a year .
2. During the third year, $5,250 cash is paid for normal
repairs necessary to keep the equipment in good working order.
3. During the fourth year, $13,950 is paid for repairs
expected to increase the useful life of the equipment from four to five
years.
