Prepare the journal entry to record the purchase of the equipment. + Assets + Li
ID: 2578071 • Letter: P
Question
Prepare the journal entry to record the purchase of the equipment.
+ Assets
+ Liabilities
+ Equity
+ Revenues/Gains
+ Expenses/Losses
GENERAL JOURNAL
Jul 1
99700
100
1000
130
How does each row of the above journal entry affect the accounting equation, and on which financial statement is it reported? If it is not affected then select "No effect" as correct answer.
APPLY THE CONCEPTS: Calculate and determine the entry for straight-line depreciation
The equipment purchased by Petroxy Oil Corporation (see the journal entry above) is expected to have a useful life of four years. At the end of its useful life, the residual value of the equipment is estimated to be $6,000. Petroxy Oil Corporation’s fiscal year ends each December 31.
In the table to the below, calculate the equipment’s depreciation expense, the balance of accumulated depreciation, and the book value for each year the equipment is expected to be in service, using the straight-line method.
HidePrepare the journal entry to record the purchase of the equipment.
Not sure about the account title? Click here to view the chart of accounts.+ Assets
+ Liabilities
+ Equity
+ Revenues/Gains
+ Expenses/Losses
GENERAL JOURNAL
pageDATE DESCRIPTION DOC.
NO. POST.
REF. DEBIT CREDIT 1
Jul 1
99700
1 2
100
2 3
1000
3 4
130
4 5
5
Explanation / Answer
Depreciation
Asset value: 99700+100= 99800
Residual value = 6000
Depreciation = 99800-6000/4=23450 per year
So 6 month depreciation = 23450/2=11725
Straight-Line Method
Year
Depreciation Expense
Accumulated Depreciation
Book Value
2011
$ 11725
$ 11725
$ 88075
2012
$ 23450
$ 35175
$ 64625
2013
$ 23450
$ 58625
$ 41175
2014
$23450
$ 82075
$ 17725
2015
$ 11725
$ 93800
$ 6000
Straight-Line Method
Year
Depreciation Expense
Accumulated Depreciation
Book Value
2011
$ 11725
$ 11725
$ 88075
2012
$ 23450
$ 35175
$ 64625
2013
$ 23450
$ 58625
$ 41175
2014
$23450
$ 82075
$ 17725
2015
$ 11725
$ 93800
$ 6000