Reference no: EM132499962

The capital asset records for Ross Company included the following information on January 1, 2019:

Equipment $788,000

Accumulated amortization - equipment 133,000

Machinery $448,000

Accumulated amortization - machinery 168,000

The following transactions took place during 2019:

1) Ross Company made payments totaling $18,500 related to the machinery and $7,600 related to the equipment for maintenance to keep the assets in normal working order.

2) Equipment with an original cost of $35,000 and accumulated amortization of $30,000 was sold for $4,000 cash.

3) Ross Company made an agreement with Rachel Ltd. to exchange two pieces of similar machinery. Ross' old machine had an original cost of $50,000 and accumulated amortization of $20,000. Ross also paid $5,000 as part of the deal.

4) Ross spent $68,500 on a major upgrade to some of the equipment that significantly increased the economic life of the equipment.

5) Ross recorded amortization for the year in the amount of $68,000 for equipment and $72,000 for machinery.

REQUIRED:

Question a. Prepare the journal entries to record the above transactions on the books of Ross Company.

Question b. Calculate the December 31, 2019 ending balances for equipment, accumulated amortization - equipment, machinery, and accumulated amortization - machinery.