Chapter 4, Problem 4.5BE

To determine

Adjusting entries:

An adjusting entry is prepared when the trial balance is not up-to-date, and complete, and they are usually prepared at the end of the accounting period. This adjusting entry is essential for preparing the financial statements of the business.

Accumulated depreciation:

Depreciation expense is the written down value of the tangible asset at the end of each accounting year. Accumulated Depreciation is a contra-asset account which is used to accumulate the depreciation expense amount on the related tangible asset, and which is deducted from the cost of the asset to show the real worth of the asset at the end of the each accounting period.

Balance sheet:

A balance sheet is a financial statement consists of the assets, liabilities, and the stockholder’s equity of the company. The balance of the assets account must be equal to that of the liabilities, and the stockholder’s equity account.

To prepare: the annual adjusting entries for depreciation, post the adjustments to T-accounts, and indicate the accumulated depreciation on the balance sheet.