Answer:
The adjusting entry for depreciation on December 31, 2018:
Debit Depreciation expense $7,500
Credit Accumulated depreciation $7,500
Explanation:
The company purchases new equipment on August 1, 2018. At the time of purchase, the equipment is expected to be used in operations 48 months. The company depreciates the equipment evenly over the 48 months ($1,500/month). From August 1, 2018 to December 31, 2018, the equipment is expected to be used for 5 months.
Depreciation expense for 2018 = $1,500 x 5 = $7,500
The adjusting entry for depreciation on December 31, 2018:
Debit Depreciation expense $7,500
Credit Accumulated depreciation $7,500
