Do the following year end adjusting entries for sturdy construction using the grid below 1) sturdy purchased a work truck for $55,000 on July 1st. It is expected to last 5 years and have no salvage value. Depreciation is done on a straight line basis and has not been recorded this year. 2) Sturdy borrowed money to purchase the work truck. They borrowed the money from Delaware National bank for a rate of 5.5% on July 1st. No interest expense has been recorded. 3) Sturdy paid their rent for one year on October 1st for a total of $8,000. No rent expense has been recorded for this year. 4) On December 31st they still owed their one employee $4,125 that will not be paid until January. 5) They took a parts inventory. On the books it said they had $7,350 but when they counted there were only $7,125.
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.
Do the following year end
1) sturdy purchased a work truck for $55,000 on July 1st. It is expected to last 5 years and have no salvage value.
2) Sturdy borrowed money to purchase the work truck. They borrowed the money from Delaware National bank for a rate of 5.5% on July 1st. No interest expense has been recorded.
3) Sturdy paid their rent for one year on October 1st for a total of $8,000. No rent expense has been recorded for this year.
4) On December 31st they still owed their one employee $4,125 that will not be paid until January.
5) They took a parts inventory. On the books it said they had $7,350 but when they counted there were only $7,125.
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