Answer:
The accounting entry to record the depreciation expense on December 31, 2021 is:
Depreciation Expense - Equipment Debit $ 9,375
Allowance for depreciation Equipment Credit $ 9,375
Explanation:
The data in the question shows that the equipment is depreciated over the estimated useful life of the asset on an even basis, this implies that the method of depreciation is straight line method.
The equipment was purchased on August 01 2021 and the adjusting entry is required on December 31, so the depreciation needs to be recorded for 5 months.
The amount shall be computed by multiplying the monthly depreciation amount with the period
$ 1,875 * 5 months = $ 9,375.
The accounting entry is debited to the depreciation expense account and credited to the allowance for depreciation.
The equipment is shown on the balance sheet date at cost less allowance for depreciation.