Question

A city government adds street lights within its boundaries at a total cost of $300,000. The lights should burn for at least 10 years but can last significantly longer if maintained properly. The city sets up a system to monitor these lights with the goal that 97 percent will be working at any one time. During the year, the city spends $48,000 to clean and repair the lights so that they are working according to the specified conditions. However, it spends another $78,000 to construct lights for several new streets in the city.a. Prepare the entries assuming infrastructure assets are capitalized with depreciation recorded. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

To prepare the journal entries for the city's street lights, the depreciation expense and accumulated depreciation for the existing street lights should be recorded, and the cost of constructing new street lights should be accounted for.

Step-by-step explanation:

The entries can be prepared as follows:

Depreciation Expense - Street Lights : $30,000 ([$300,000 - $48,000] / 10 years) is debited and Accumulated Depreciation - Street Lights : $30,000 is credited to reflect the depreciation of the street lights over a period of 1 year.

Street Lights (newly constructed) : $78,000 is debited and Cash : $78,000 is credited to reflect the cost of constructing new street lights.

No journal entry is required for the cleaning and repair of the lights as it is considered an expense and not an asset.

Answer 2

Please see attachment

Step-by-step explanation:

Please see attachment