Question

On January 1, Miami Gold Exchange paid cash of $64,800 for computers that are expected to remain useful for six years. At the end of six years, the value of the computers is expected to be zero Read the requirements Requirement 1. Calculate the amount of depreciation for the month of January using the straight-line depreciation method. Begin by selecting the labels, than enter the amounts and compute the amount of depreciation for the month of January. (Abbreviation used; Acc. Depreciation Accumulated Depreciation. Enter a "O" for any zero balances.) )1 / 12 monthsStraight-line depreciation Requirements 1. Calculate the amount of depreciation for the month of January using the straight-line depreciation method 2. Record the adjusting entry for depreciation on January 31 3. Post the purchase of January 1 and the depreciation on January 31 to T-accounts for the following accounts: Computer Equipment, Accumulated DepreciationComputer Equipment, and Depreciation Expense Computer Equipment. Show their balances at January 31 4. What is the computer equipment's book value at January 31?

Answer 1

Answer: See explanation

Explanation:

The amount of depreciation for the month of January using the straight line depreciation method will be:

= (Cost - Salvage Value) / Life of Assets / 12 Months

= ($64,800 - $0) / 6 Years / 12 Months

= $10800/12

= $900 per month

The adjusting entry for depreciation on January 31 will be:

Dr Depreciation Expense - Computer Equipment $900

Cr Accumulated Depreciation-Computer Equipment $900

(To record the depreciation expense)