On January 1, 2018, the general ledger of ACME Fireworks includes the following

Question

On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances:
  

Record the depreciation for the month of January.

1. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a residual value of $5,300 and a two-year service life.

  Accounts Debit Credit   Cash $ 27,000   Accounts Receivable 50,000   Allowance for Uncollectible Accounts $ 6,100   Inventory 21,900   Land 65,000   Equipment 24,500   Accumulated Depreciation 3,400   Accounts Payable 30,400   Notes Payable (6%, due April 1, 2019) 69,000   Common Stock 54,000   Retained Earnings 25,500        Totals $ 188,400 $ 188,400

Record the depreciation for the month of January.

1. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a residual value of $5,300 and a two-year service life.

Explanation / Answer

first let us calculate the monthly depreciation using straight line method:

(cost - residual value) / life in months.

=> (24,500 - 5,300) / (2years *12 months)

=>19,200/24

=>$800 per month.

the following will be journal entry to record depreciation for the month of january:

date accounts debit credit january 31 depreciation expense a/c $800 ................To Accumulated depreciation a/c $800

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---