Problem: THE COMPANY PURCHASED EQUIPMENT FOR 245,000 ON OCTOBER 31, 2018, AND FURNITURE AMOUNTING TO 90,000 ON FEBRUARY 28, 2019. THE EQUIPMENT HAS AN ESTIMATED USEFUL LIFE OF 6 YEARS ANS SALVAGE VALUE OF 2,000. AND THE FURNITURE HAS A USEFUL LIFE OF 5 YEARS AND SALVAGE VALUE OF 3,000 PREPARE THE FOLLOWING ADJUSTING ENTRIES: WHAT IS THE ADJUSTING ENTRY TO RECORD THE DEPRECIATION ON DEC 31, 2019 FOR BOTH THE EQUIPMENT AND FURNITURE? 1. DR. = ? 2. =? 3. CR. = ? 4. = ? 5. CR. =? 6. = ?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Problem: THE COMPANY PURCHASED EQUIPMENT FOR 245,000 ON OCTOBER 31, 2018, AND FURNITURE AMOUNTING TO 90,000 ON FEBRUARY 28, 2019. THE EQUIPMENT HAS AN ESTIMATED USEFUL LIFE OF 6 YEARS ANS SALVAGE VALUE OF 2,000. AND THE FURNITURE HAS A USEFUL LIFE OF 5 YEARS AND SALVAGE VALUE OF 3,000
PREPARE THE FOLLOWING
1. DR. = ? 2. =?
3. CR. = ? 4. = ?
5. CR. =? 6. = ?
INSTRUCTIONS: Choose from the following accounts for the correct account of adjusting entries. Encode only the corresponding capital letter of the correct answer/
A.
B. ACCUMULATED DEPRECIATION- FURNITURE
C. EQUIPMENT
D. FURNITURE
E. DEPRECIATION EXPENSE
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