Explanation Prepare journal entries to record the given transaction for 2016 as follows: Date Account Title and Explanation Post Ref. Debit ($) Credit ($) January 1, 2016 Trucks (1) 22,000 Cash 22,000 (To record the purchase of truck) Table (1) Truck is an asset account and it increases the value of asset. Therefore, debit Trucks account by $22,000. Cash is an asset account and it decreases the value of asset. Therefore, credit Cash account by $22,000. Date Account Title and Explanation Post Ref. Debit ($) Credit ($) December 31, 2016 Depreciation Expense (2) 4,000 Accumulated Depreciation – Trucks 4,000 (To record the depreciation expense for truck) Table (2) Description : Depreciation Expense is an expense account and it is increased by $4,000. Expenses are the component of stockholder’s Equity and it decreases the value of equity. Therefore, debit Depreciation Expenses account with $4,000. Accumulated Depreciation is a contra-asset account and would have a normal credit balance. Therefore, credit Accumulated Depreciation account with $4,000. Working Notes : Compute the acquisition cost of truck : Acquisition cost of Truck = Purchase value + Sales tax = $20,515 + $ 1,485 = $22,000 (1) Compute depreciation expense : Depreciation = [ Acquisition cost of Truck– Salvage value ] Useful life = $22,000 − $2,000 5 years = $4,000 (2) Prepare journal entries to record the given transaction for 2017 as follows: Date Account Title and Explanation Post Ref. Debit ($) Credit ($) December 31, 2017 Depreciation Expense (5) 5,200 Accumulated Depreciation – Trucks 5,200 (To record the depreciation expense for truck) Table (3) Description : Depreciation Expense is an expense account and it is increased by $5,200. Expenses are the component of stockholder’s Equity and it decreases the value of equity. Therefore, debit Depreciation Expenses account with $5,200. Accumulated Depreciation is a contra-asset account and would have a normal credit balance. Therefore, credit Accumulated Depreciation account with $5,200

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Author: Wild

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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…

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Chapter 8 Solutions

Financial Accounting Fundamentals

Ch. 8 - Prob. 1MCQ Ch. 8 - Prob. 2MCQ Ch. 8 - Prob. 3MCQ Ch. 8 - Prob. 4MCQ Ch. 8 - Prob. 5MCQ Ch. 8 - Prob. 1DQ Ch. 8 - Prob. 2DQ Ch. 8 - Prob. 3DQ Ch. 8 - Prob. 4DQ Ch. 8 - Prob. 5DQ

Ch. 8 - Prob. 6DQ Ch. 8 - Prob. 7DQ Ch. 8 - Prob. 8DQ Ch. 8 - Prob. 9DQ Ch. 8 - Prob. 10DQ Ch. 8 - Prob. 11DQ Ch. 8 - Prob. 12DQ Ch. 8 - Prob. 13DQ Ch. 8 - Prob. 14DQ Ch. 8 - Prob. 15DQ Ch. 8 - Prob. 16DQ Ch. 8 - Prob. 17DQ Ch. 8 - Prob. 18DQ Ch. 8 - Prob. 19DQ Ch. 8 - Prob. 20DQ Ch. 8 - Prob. 21DQ Ch. 8 - Prob. 1QS Ch. 8 - Prob. 2QS Ch. 8 - Prob. 3QS Ch. 8 - Prob. 4QS Ch. 8 - Prob. 5QS Ch. 8 - Prob. 6QS Ch. 8 - Prob. 7QS Ch. 8 - Prob. 8QS Ch. 8 - Prob. 9QS Ch. 8 - Prob. 10QS Ch. 8 - QS 8-11 Classifying assets Identify the following...Ch. 8 - Prob. 12QS Ch. 8 - Prob. 13QS Ch. 8 - Prob. 14QS Ch. 8 - Prob. 15QS Ch. 8 - Prob. 1E Ch. 8 - Prob. 2E Ch. 8 - Prob. 3E Ch. 8 - Prob. 4E Ch. 8 - Prob. 5E Ch. 8 - Prob. 6E Ch. 8 - Exercise 8-7 Straight-line depreciation In early...Ch. 8 - Exercise 8-8 Double-declining-balance...Ch. 8 - Prob. 9E Ch. 8 - Exercise 8-10 Double-declining-balance...Ch. 8 - Prob. 11E Ch. 8 - Prob. 12E Ch. 8 - Prob. 13E Ch. 8 - Prob. 14E Ch. 8 - Prob. 15E Ch. 8 - Prob. 16E Ch. 8 - Prob. 17E Ch. 8 - Prob. 18E Ch. 8 - Prob. 19E Ch. 8 - Prob. 20E Ch. 8 - Prob. 21E Ch. 8 - Prob. 22E Ch. 8 - Prob. 23E Ch. 8 - Prob. 24E Ch. 8 - Prob. 25E Ch. 8 - Prob. 1AP Ch. 8 - Prob. 2AP Ch. 8 - Prob. 3AP Ch. 8 - Prob. 4AP Ch. 8 - Prob. 5AP Ch. 8 - Prob. 6AP Ch. 8 - Prob. 7AP Ch. 8 - Prob. 8AP Ch. 8 - Prob. 1BP Ch. 8 - Prob. 2BP Ch. 8 - Prob. 3BP Ch. 8 - Prob. 4BP Ch. 8 - Prob. 5BP Ch. 8 - Prob. 6BP Ch. 8 - Prob. 7BP Ch. 8 - Prob. 8BP Ch. 8 - Prob. 8SP Ch. 8 - Prob. 1BTN Ch. 8 - Prob. 2BTN Ch. 8 - Prob. 3BTN Ch. 8 - Prob. 7BTN Ch. 8 - Prob. 9BTN

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