Having some discrepancies with this question. Would like some guidance on what the entries would be for this one. Below is what we have, but I think it’s not correct and probably more complicated then it needs to be. Option 4: Overhaul the existing equipment. The following immediate expenditures are anticipated under this approach: (1) The normal annual cost for lubrication and replacement of minor parts to maintain the integrity of the exterior body would be $27,000. (2) The cost of re-wiring interior components in an overhaul would be $125,000. (3) Replacing old worn components would cost $82,000 with associated labour costs of $210,000 for installation. The overhaul is estimated to extend the useful life of the equipment another four years. .The components being replaced had an original cost of $60,000. (The present equipment’s original useful life was eight years at the end of 2014, starting January 1, 2007.) The costs will be financed through a one-year loan for $350,000 at 10%, and the balance will be charged on account. ATTACHMENT PREVIEW Download attachment Option 4.xls General Journal Date Account Title JE # Cash Debit Credit 350,000.00 Interest Payable 35,000.00 Loan Interest 35,000.00 Loan 350,000.00 Repair and Maintenance expenses 27,000.00 Cash 27,000.00 Equipment – Overhaul – Replace components Accumulated Depreciation – equip 125,000.00 292,000.00 53,182.00 390000 x 60000/440000 Loss on overhaul 6,818.00 Equipment – To decommission old parts 60,000.00 Cash 323,000.00 Accounts payable Depreciation expense 94,000.00 9,729.00 Accumulated depreciation [50,000 + 125,000 + 292,000 (no residual)/4 years x 1/12] 9,729.00 General Ledger Account Names Statement of Financial Position Accoun Cash and cash equivalents Short-term investments Accounts receivable Balance 12/31/13 Debit Prepaid expenses Property, plant and equipment Unadjusted Trial Balance 2014 Debit Credit Proposed Adjustments Debit Credit 350,000 Adjusted Trial Bal 12/31/14 Debit 210,277 1,040,000 1,050,000 782,080 815,275 Credit 1,050,000 815,275 102,470 350,000 JE# 40,277 Allowance for doubtful accounts Inventory Credit 210,277 119,000 119,000 1,340,902 1,745,585 1,745,585 17,174 17,174 17,174 1,195,192 1,195,192 Accumumlated depreciation – PPE 528,585 423,818 666,085 60,000 53,182 1,559,010 9,729 622,632 Long-term investments 140,186 140,186 140,186 Goodwill 397,740 397,740 397,740 Intangible assets 253,900 248,900 248,900 Accounts payable 1,228,441 1,418,915 94,000 350,000 Interest payable 350,000 35,000 Loan payable 1,512,915 35,000 Dividends payable 110,000 115,000 115,000 Accrued liabilities 381,661 574,335 574,335 70,800 105,000 105,000 Long term bonds payable 888,500 708,500 708,500 Common shares 920,000 920,000 920,000 Preferred shares 200,000 200,000 200,000 Retained earnings, beginning balance 678,994 776,994 776,994 Unearned revenue Dividends 110,000 Net Income 115,000 208,000 5,317,451 5,317,451 115,000 331,500 5,935,329 5,935,329 (71,729) 827,000 827,000 259,771 6,299,147 6,299,147 Income Statement Accounts Product sales revenue 8,400,000 Product sales returns & discounts Products cost of goods sold Service cost of goods sold Bad debt expense Depreciation and amortization Gain/loss on disposal of PPE Income tax expense 9,100,000 675,000 Service revenue 9,100,000 985,000 985,000 462,000 500,000 500,000 4,956,000 5,400,000 5,400,000 310,000 450,000 450,000 46,000 20,000 20,000 120,000 137,500 9,729 147,229 4,000 199,000 178,500 178,500 Insurance 77,000 80,000 80,000 Interest expense 65,000 48,000 Investment income (loss) 17,000 35,000 83,000 10,500 10,500 Other operating expenses 828,000 900,000 Research and development 117,000 200,000 200,000 1,700,000 1,850,000 1,850,000 Wages and benefits Net (Income) Loss (208,000) 8,884,000 8,884,000 27,000 (331,500) 9,764,000 9,764,000 927,000 71,729 71,729 71,729 (259,771) 9,835,729 9,835,729 CM Corporation Remember the 2014 column is Statement of Financial Position management’s projection As at Dec