Question

For each separate case, record an adjusting entry (if necessary). Barga Company purchases $32,000 of equipment on January 1. The equipment is expected to last five years and be worth $4,400 at the end of that time. Welch Company purchases $11,200 of land on January 1. The land is expected to last forever.

Answer 1

Answer:

Equipment:

                                                  Dr.       Cr.

Depreciation Expense          $5,520

Accumulated Depreciation                $5,520

Land:

Land never depreciates, so there is no adjusting entry for the Land purchased on year end.

Explanation:

Year end is not given in the data so, it is assumed the December 31 is the end of the year

Equipment

Depreciation  for the year = ( Purchase price - Residual value ) / useful life

Depreciation  for the year = ( $32,000 - $4,400 ) / 5 years

Depreciation  for the year = $5,520