Reference no: EM132755971

Hulme Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of 2020, an asset account for the company showed the following balances:

Manufacturing equipment $120,000
Accumulated depreciation through 2019 $57,600

During 2020, the following expenditures were incurred for the equipment:

Major overhaul of the equipment on January 2, 2020, that improved efficiency $13,000
Routine maintenance and repairs on the equipment 1,000

The equipment is being depreciated on a straight-line basis over an estimated life of 15 years with a $12,000 estimated residual value. The annual accounting period ends on December 31.

Required:

Problem 1: Prepare the adjusting entry that should be made by Hulme Company at the end of 2020 for depreciation of the manufacturing equipment, assuming no change in the original estimated life or residual value. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.)