Question

Tom’s Grocery purchased 5 new cash registers for their new store and they paid $2,400 each for a total of $12,000 on August 1, 2013, the day they were delivered. The cash registers are expected to have useful lives of 5 years and they are not expected to have any salvage value. Tom's Grocery uses straight-line depreciation. The cash registers were recorded as long-lived assets at the time of the purchase and now Tom's needs to make an entry showing the expense related to these cash registers up to December 31, 2013.
Please specify which accounts will be used, AND the amounts associated with each to balance.

a. ACCOUNTS
b. ACCOUNTS RECEIVABLE
c. DEPRECIATION
d. RETAINED EARNINGS
e. ACCOUNTS PAYABLE
f. PROPERTY, PLANT, & EQUIPMENT

Answer 1

Answer:

c. Depreciation $1,000

f. Property, Plant and Equipment $12,000

Explanation:

Tom's Grocery purchased 5 new cash registers which amount $2400 each. They have useful life of 5 years. Using straight line depreciation the annual depreciation charge will be $2,400 / 5 which is $480 per year per cash register. There are 5 cash registers so total depreciation expense will be  $480 * 5 = $2,400 per year for 5 registers.

The registers are bought on August 1st, 2013 and the year end is December 31st, 2013 there are 5 months, the depreciation expense will be prorated based on the months.

$2,400 * 5/12

$1,000.