Bob’s Chocolate Chips and More, a bakery specializing in gourmet pizza and chocolate chip cookies, started business October 1, 20X1. The following transactions occurred during the month of October. Common stock of $90,000 was sold at par to start the business.Equipment consisting of mixers and ovens was acquired October 1 for $30,000 cash. The equipment is expected to last five years, after which it is expected to be sold for $5,000. Management uses the straight-line method to calculate depreciation expense.Ingredients costing $15,000 were purchased on account during the month and all but $5,000 was paid for by the end of the month.Rent is $500 a month. October, November, and December’s rent was paid October 5.A payment of $800 for utilities was made during the month.Sixty percent of the ingredients purchased in part c were prepared and sold for $35,000 on account; $26,000 was collected on accounts receivable during the month.Wages of $5,200 were paid during the month. Moreover, wages for the last three days of the month amounted to $400 and will be paid during the first week of November.Borrowed $12,000 from the bank for additional working capital requirements, and $3,000 was repaid by month-end. Interest on the unpaid loan balance amounted to $450 at the end of October and was paid on November 5Prepare the adjusting entry to record the depreciation on equipment.

Depreciation Expense = (Cost - Salvage Value)/Useful life

Answered: Prepare the adjusting entry to record…

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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Bob’s Chocolate Chips and More, a bakery specializing in gourmet pizza and chocolate chip cookies, started business October 1, 20X1. The following transactions occurred during the month of October.

Common stock of $90,000 was sold at par to start the business.
Equipment consisting of mixers and ovens was acquired October 1 for $30,000 cash. The equipment is expected to last five years, after which it is expected to be sold for $5,000. Management uses the straight-line method to calculate depreciation expense.
Ingredients costing $15,000 were purchased on account during the month and all but $5,000 was paid for by the end of the month.
Rent is $500 a month. October, November, and December’s rent was paid October 5.
A payment of $800 for utilities was made during the month.
Sixty percent of the ingredients purchased in part c were prepared and sold for $35,000 on account; $26,000 was collected on accounts receivable during the month.
Wages of $5,200 were paid during the month. Moreover, wages for the last three days of the month amounted to $400 and will be paid during the first week of November.
Borrowed $12,000 from the bank for additional working capital requirements, and $3,000 was repaid by month-end. Interest on the unpaid loan balance amounted to $450 at the end of October and was paid on November 5

Prepare the adjusting entry to record the depreciation on equipment.

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