Question

On January 1, the company purchased equipment that cost $10,000. The equipment is expected to be worth about (or has a salvage value of) $1,000 at the end of its useful life in five years. The company uses straight-line depreciation. It has not recorded any adjustments relating to this equipment during the current year. Complete the necessary December 31 journal entry by selecting the account names from the pull-down menus and entering dollar amounts in the debit and credit columns.

Answer 1

Answer:

Explanation:

Before passing the journal entry , first we have to compute the depreciation amount under straight line method.

The formula to compute depreciation expense is shown below:

= $\dfrac{(original\ cost - salvage\ value)}{Number\ of\ years}$

= $\dfrac{(\ 10,000 - \ 1,000) }{5\ years}$

= $1,800

The journal entry is shown below:

Jan 1 Equipment A/c Dr   $10,000

    To cash                              $10,000

(Being equipment is purchased)

Jan 31 Depreciation expense A/c Dr  $1,800

                To Accumulated depreciation           $1,800

(Being depreciation expense recorded)