Question

For each separate case, record an adjusting entry (if necessary). Barga Company purchases $20,000 of equipment on January 1. The equipment is expected to last five years and be worth $2,000 at the end of that time. Welch Company purchases $10,000 of land on January 1. The land is expected to last forever. Prepare the entries to record one year’s depreciation expense of $3,600 for the equipment and what depreciation adjustment, if any, should be made with respect to the Land account as of December 31?

Answer 1

Answer:

Explanation:

Depreciation: It is a reduction value in the assets due to tear and wear, usage of fixed assets, obsolesce. The depreciation expense is shown in the income statement whereas the accumulated depreciation is shown in the balance sheet under the assets and this amount is deducted from the value of the fixed assets

The adjusting entries are shown below:

For equipment:

Depreciation expense A/c - Equipment Dr $3,600

        To Accumulated depreciation - Equipment $3,600

(Being depreciation expense adjusted)

For land:

No journal entry is required as land is not depreciated.