Compton Inc. made a $500 ordinary repair to a piece of equipment. Compton's accountant debited this amount to the asset account. Equipment and credited Cash. Was this the correct entry and if not. why not? a) Yes, this was the correct entry.
b) No, the correct entry would be a debit to Maintenance and Repairs Expense and a credit to Cash.
c) No, the correct entry would be a debit to Cash and a credit to Maintenance and Repairs Expense.
d) No, the correct entry would be a debit to Service Revenue and a credit to Cash.

b) No, the correct entry would be a debit to Maintenance and Repairs Expense and a credit to Cash.

Explanation:

Any expense will be capitalized when it increases the capacity and efficiency of the asset. A routine repair cost is incurred in order to keep the asset operational to generate income for the business.

To record the repair cost we need to debit the Maintenance and Repairs Expense and crediting cash ( assumed cash payment is made for the repairs ). We should not capitalize this cost by debiting the asset cost account.

if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough

107x106 is the answer