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On July 1, 2018, Chinook Incorporated purchased a piece of equipment used in their manufacturing department for $616,000. The equipment has an estimated useful life of 10 years and a residual value of $55,100. Chinook has a December 31st year-end. Assume Chinook always uses the straight-line method to depreciate capital assets. On January 1, 2021, Chinook's paid $180,000 for a betterment to the equipment which extended the life another five years and the residual value is now $37,000.
REQUIRED:
Problem 1: Prepare the journal entries to record the depreciation for year ended December 31, 2021.
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