Question

Vaughn Manufacturing purchased equipment for $15300 on December 1. It is estimated that annual depreciation on the computer will be $3060.
If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

A) debit Depreciation Expense, $250, credit Accumulated Depreciation, $250.
B) debit Depreciation Expense, $3,060: credit Accumulated Depreciation, $3,060.
C) debit Equipment, $15,300: credit Accumulated Depreciation, $15,300.
D) debit Depreciation Expense, $12,240: ccredit Accumulated Depreciation, $12,240.
E) None of the above.

Answer 1

Answer:

The correct answer is option (E).

Explanation:

According to the scenario, computation of the given data are as follows:

Equipment = $15,300

Estimated annual depreciation = $3,060

Time period = 1 month

So, Depreciation = $3,060 × 1 ÷ 12

= $255

So, Here journal entry are as follows:

Depreciation A/c Dr $255

To Accumulated depreciation A/c $255

(Being the depreciation is recorded)