At the end of its yearthe adjusted trial of Rafael Company is as follows No. 101 112 157 167 201 208 301 306 404 429 711 720 729 RAFAEL COMPANY Adjusted Trial Balance July 31, 2003 Account Titles Cash Accounts Receivable Equipment Accumulated Amortization Accounts Payable Unearned Rent Revenue R. Rafael, Capital R. Rafael, Drawings Commission Revenue Rent Revenue Amortization Expense Salaries Expense Rent Expense Totals Debits $ 14,940 8,780 15,900 14,000 4,000 55,700 14,900 $128,220 Credits $ 5,400 6,220 1,800 45,200 Instructions (a) Prepare the closing entries, and post them to the appropriate accounts. (b) Prepare a post-closing trial balance at July 31, 2003. 63,100 6,500 $128.220
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.
Closing entries are posted in the books at the end of the period in order to close the temporary accounts. Temporary accounts includes the revenue accounts, expense accounts, drawings.
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