Depreciation for the current year includes equipment, $2,100 explains it **Journal Entry for Recording Depreciation on Equipment**Below is an example of a journal entry to record depreciation on equipment. This illustration is vital for understanding how to account for the gradual reduction in the value of equipment over time due to usage and wear and tear.### Journal Entry:| Date | Accounts and Explanation | Debit | Credit ||-------|-----------------------------|----------------|--------------|| Dec 31| Depreciation Expense - Equipment | $2,700 | || | Accumulated Depreciation - Equipment | | $2,700 |**Explanation:**- **Depreciation Expense - Equipment**: This account is debited $2,700 to recognize the expense associated with the use of the equipment.- **Accumulated Depreciation - Equipment**: This account is credited $2,700 to accumulate the total depreciation of the equipment over its useful life.### Note:The entry is made on December 31st, indicating it is part of year-end adjusting entries. The purpose of this entry is to record the expense for the period and to update the accumulated depreciation account accordingly.Understanding these entries is crucial for accurate financial reporting and for ensuring that the value of assets on the balance sheet reflects their true, depreciated value.### Diagram Explanation:The diagram above depicts a journal entry format, divided into four main columns:1. **Date**: Indicates when the transaction occurred.2. **Accounts and Explanation**: Lists the accounts affected and provides a brief description of the transaction.3. **Debit**: Shows the amount debited to the respective account.4. **Credit**: Shows the amount credited to the respective account.In this example, the entry reflects the recording of depreciation on equipment at the end of the financial period. Such entries are integral components of accounting practices, ensuring accurate financial tracking and compliance with accounting standards. **Chapter 3 Discussion: Transactions for Betterton Welding Services**1. **Depreciation for the current year includes equipment, $2,100.**2. **Employee Payments**: Each Monday, Betterton pays employees for the previous week's work (Monday to Sunday). This year, December 31 falls on Thursday.3. **Office Supplies**: The beginning balance of Office Supplies was $2,300. During the year, December 31, the office supplies on hand totaled $1,000.4. **Insurance Prepayment**: Betterton prepaid a two full years’ insurance on July 1 of the current year, December 31.5. **Unearned Revenue**: Betterton had earned $2,800 of unearned revenue.6. **Interest Expense**: Betterton had incurred (but not recorded) $200 of interest expense on December 28.7. **Customer Billing**: Betterton billed customers $3,000 for welding services performed.**Instructions**:Journalize the adjusting entry needed on December 31 for each situation.

For recording of depreciation expense, depreciation account will be debited and accumulated…

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Depreciation for the current year includes equipment, $2,100 explains it

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Depreciation for the current year includes equipment, $2,100 explains it

**Journal Entry for Recording Depreciation on Equipment**

Below is an example of a journal entry to record depreciation on equipment. This illustration is vital for understanding how to account for the gradual reduction in the value of equipment over time due to usage and wear and tear.

### Journal Entry:

| Date | Accounts and Explanation | Debit | Credit |
|-------|-----------------------------|----------------|--------------|
| Dec 31| Depreciation Expense - Equipment | $2,700 | |
| | Accumulated Depreciation - Equipment | | $2,700 |

**Explanation:**
- **Depreciation Expense - Equipment**: This account is debited $2,700 to recognize the expense associated with the use of the equipment.
- **Accumulated Depreciation - Equipment**: This account is credited $2,700 to accumulate the total depreciation of the equipment over its useful life.

### Note:
The entry is made on December 31st, indicating it is part of year-end adjusting entries. The purpose of this entry is to record the expense for the period and to update the accumulated depreciation account accordingly.

Understanding these entries is crucial for accurate financial reporting and for ensuring that the value of assets on the balance sheet reflects their true, depreciated value.

### Diagram Explanation:

The diagram above depicts a journal entry format, divided into four main columns:
1. **Date**: Indicates when the transaction occurred.
2. **Accounts and Explanation**: Lists the accounts affected and provides a brief description of the transaction.
3. **Debit**: Shows the amount debited to the respective account.
4. **Credit**: Shows the amount credited to the respective account.

In this example, the entry reflects the recording of depreciation on equipment at the end of the financial period. Such entries are integral components of accounting practices, ensuring accurate financial tracking and compliance with accounting standards.

**Chapter 3 Discussion: Transactions for Betterton Welding Services**

1. **Depreciation for the current year includes equipment, $2,100.**

2. **Employee Payments**:
Each Monday, Betterton pays employees for the previous week's work (Monday to Sunday). This year, December 31 falls on Thursday.

3. **Office Supplies**:
The beginning balance of Office Supplies was $2,300. During the year, December 31, the office supplies on hand totaled $1,000.

4. **Insurance Prepayment**:
Betterton prepaid a two full years’ insurance on July 1 of the current year, December 31.

5. **Unearned Revenue**:
Betterton had earned $2,800 of unearned revenue.

6. **Interest Expense**:
Betterton had incurred (but not recorded) $200 of interest expense on December 28.

7. **Customer Billing**:
Betterton billed customers $3,000 for welding services performed.

**Instructions**:
Journalize the adjusting entry needed on December 31 for each situation.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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