Question

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four year useful life and an $8,000 salvage value. If Marino uses the straight-line method, which of the following shows the adjusting entry to recognize depreciation expense at the end of Year 2? Multiple Choice Account Titles Debit Credit Accumulated Depreciation 20,000 Depreciation Expense 20,000 Account Titles Debit Credit Depreciation Expense 20,000 Accumulated Depreciation 20,000 Account Titles Debit Credit Accumulated Depreciation 10,000 Depreciation Expense 10,000 Account Titles Debit Credit Depreciation Expense 10,000 Accumulated Depreciation 10,000

Answer 1

Answer:

Account Titles                   Debit      Credit

Depreciation Expense      10,000

Accumulated Depreciation             10,000

Explanation:

Depreciation is the actual decrease in the value of an asset. The asset is depreciated on its useful life on by a fixed percentage of carrying value.

Original Cost of Truck = $48,000

Estimated useful Life = 4 years

Estimated Salvage Value = $8,000

Formula for straight line depreciation is

Depreciation per year =( Cost of Asset - salvage value ) / useful life

Depreciation per year = ( $48,000 - $8,000 ) / 4 years

Depreciation per year = 10,000 per year

$10,000 will be charged every year for 4 years.