Question

At the end of the current accounting period, Rodgers Co. recorded depreciation of $25,000 on its equipment. The effect of this entry on the company's balance sheet is to:

Answer 1

It reduce the owner equity and asset account balance

Step-by-step explanation:

Depreciation: The depreciation is an expense that shows a reduction in the value of the fixed assets due to tear and wear, obsolesce, usage, time period, etc. It is shown on the debit side of the income statement. It is a non-cash item that does not affect the cash balance.

The accumulated depreciation is the depreciation which is till date. It is a contra account and reduce the asset balance.

The journal entry is shown below:

Depreciation Expense A/c Dr XXXXX

To Accumulated Depreciation A/c XXXXX

(Being depreciation expense is recorded)