Question

Meat Puppets Company purchased equipment for $7,200 on December 1. It is estimated that annual depreciation on the equipment will be $1,800. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

Answer 1

Answer:

b. Debit Depreciation Expense, $150; Credit Accumulated Depreciation, $150.

Explanation:

The adjusting entry is as follows

Depreciation expense Dr - Equipment

            To Accumulated depreciation

(Being the depreciation expense is recorded)

The computation is shown below:

= $1,800 ÷ 12 months

= $150

We simply debited the depreciation expense and credited the accumulated depreciation for $150 so that the proper posting could be done