Question

If a fixed asset, such as a computer, were purchased on January 1st for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is:________1. EOM Accumulated Depreciation 1,200Depreciation Expense 1,2002. EOM Depreciation Expense 100Accumulated Depreciation 1003. EOM Accumulated Depreciation 100Depreciation Expense 1004. EOM Depreciation Expense 1,200Accumulated Depreciation 1,200

Answer 1

Answer:

2. EOM Depreciation Expense 100 Accumulated Depreciation 100

Explanation:

The journal entry to record the monthly expense under straight-line depreciation is shown below:

EOM Depreciation Expense A/c Dr $100

      To Accumulated Depreciation A/c $100

(Being depreciation expense is recorded)

The computation is shown below:

= (Purchase value of a fixed assets - estimated residual value) ÷ (useful life × total number of months in a year)  

= ($3,750 - $150) ÷ (3 years × 12 months)  

= ($3,600) ÷ (36 years)  

= $100