PROBLEM: THE COMPANY PURCHASED EQUIPMENT ON ACCOUNT FOR 190,000 ON SEPTEMBER 1, 2017. THE EQUIPMENT HAS AN ESTIMATED USEFUL LIFE OF 0F 8 YEARS AND A SALVAGE VALUE OF 10,000. DETERMINE THE FOLLOWING: A. WHAT WAS THE ADJUSTING ENTRY ON DEC 31, 2017? 1. DR. = 22500 2. = ? 3. CR. = 22500 4. = ? B. WHAT WAS THE THE ADJUSTING ENTRY ON DEC 31, 2020? 5. DR. =? 6. =? 7. CR. = ? 8. = ? CHOOSE FROM THE FOLLOWING ACCOUNTS FOR THE CORRECT ACCOUNT OF ADJUSTING ENTRIES: A. ACCUMULATED DEPRECIATION - EQUIPMENT B. ALLOWANCE FOR DOUBTFUL ACCOUNTS C. ACCOUNTS RECEIVABLE D. BAD DEBTS E. DEPRECIATION EXPENSE F. EQUIPMENT
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 ON ACCOUNT FOR 190,000 ON SEPTEMBER 1, 2017. THE EQUIPMENT HAS AN ESTIMATED USEFUL LIFE OF 0F 8 YEARS AND A SALVAGE VALUE OF 10,000.
DETERMINE THE FOLLOWING: A. WHAT WAS THE ADJUSTING ENTRY ON DEC 31, 2017?
1. DR. = 22500 2. = ?
3. CR. = 22500 4. = ?
B. WHAT WAS THE THE ADJUSTING ENTRY ON DEC 31, 2020?
5. DR. =? 6. =?
7. CR. = ? 8. = ?
CHOOSE FROM THE FOLLOWING ACCOUNTS FOR THE CORRECT ACCOUNT OF
A.
B. ALLOWANCE FOR DOUBTFUL ACCOUNTS
C.
D.
E. DEPRECIATION EXPENSE
F. EQUIPMENT
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