Oki Company pays $261,200 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.
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| 1. |
During the second year of the equipment’s life, $20,600 cash is paid for a new component expected to increase the equipment’s productivity by 10% a year.
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| 2. |
During the third year, $5,150 cash is paid for normal repairs necessary to keep the equipment in good working order.
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| 3. |
During the fourth year, $13,550 is paid for repairs expected to increase the useful life of the equipment from four to five years.
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