(Learning Objective 3: Adjust the accounts for depreciation) Suppose that on January 1Sunbeam Travel Company paid cash of $50,000 for equipment that is expected to remain usefulfor four years. At the end of four years, the equipment’s value is expected to be zero.1. Make journal entries to record (a) the purchase of the equipment on January 1 and (b) annualdepreciation on December 31. Include dates and explanations, and use the following accounts:Equipment, Accumulated Depreciation—Equipment, and Depreciation Expense—Equipment.2. Post to the accounts and show their balances at December 31.3. What is the equipment’s book value at December 31?

Question

(Learning Objective 3: Adjust the accounts for depreciation) Suppose that on January 1
Sunbeam Travel Company paid cash of $50,000 for equipment that is expected to remain useful
for four years. At the end of four years, the equipment’s value is expected to be zero.
1. Make journal entries to record (a) the purchase of the equipment on January 1 and (b) annual
depreciation on December 31. Include dates and explanations, and use the following accounts:
Equipment, Accumulated Depreciation—Equipment, and Depreciation Expense—Equipment.
2. Post to the accounts and show their balances at December 31.
3. What is the equipment’s book value at December 31?

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Depreciation Accounting

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Identify the normal balance (debit [Dr] or credit [Cr]) for each of the following accounts. Equipmen...

A: Equipment: It is the fixed asset of the organization.

Q: Which categories are non value added activities?

A: Non value added activities are those activities that does not actually add value to the product or s...

Q: Rooney Modems, Inc. makes modem cards that are used in notebook computers. The company completed the...

A: Depreciation = ( cost of Asset - salvage value ) / useful life

Q: What information is reported in a balance sheet?

A: Click to see the answer

Q: Fill in each of the following T-accounts for Belle Co.’s seven transactions listed here. The T-accou...

A: T-account: T-account refers to an individual account, where the increases or decreases in the value ...

Q: Define equity

A: Equity in accounting and finance is also known as owner's equity or shareholders equity. Equity mean...

Q: Define Callable Bonds

A: Bond: A bond can be defined as fixed income investment in which an investor gives money to a firm o...

Q: what do you mean by management accounting? differentiate between financial accounting, cost accounti...

A: Management Accounting Management Accounting is basically a tool which assist the management in bette...

Q: Indicate the section where transactions would appear on the statement of cash flows.O. Cash flows fr...

A: Statement of cash flows: Statement of cash flow is a financial statement that shows the cash and ca...