Question

At the beginning of year 1, Zach Company purchased a piece of equipment for $3,600 with a three-year life and no residual value. Using the straight-line method, what is the adjusting entry for depreciation expense at the end of year 1?

A. Depreciation Expense - Equipment 3,600
Accumulated Depreciation - Equipment 3,600

B. Depreciation Expense - Equipment 1,200
Accumulated Depreciation - Equipment 1.200

Answer 1

The adjusting entry for depreciation expense at the end of year 1 using the straight-line method would be $1,200 for both Depreciation Expense - Equipment and Accumulated Depreciation - Equipment.

Step-by-step explanation:

The adjusting entry for depreciation expense at the end of year 1 using the straight-line method would be option B.

Depreciation expense is calculated by dividing the cost of the equipment by its useful life. In this case, the cost of the equipment is $3,600 and the useful life is three years, so the yearly depreciation expense would be $1,200. This amount is recorded in the Depreciation Expense - Equipment account. It is then offset by an equal amount in the Accumulated Depreciation - Equipment account, since depreciation expense reduces the value of the equipment over time.

Answer 2

The adjusting entry for depreciation expense at the end of year 1 using the straight-line method is B. $1,200 for both Depreciation Expense and Accumulated Depreciation.

Step-by-step explanation:

The adjusting entry for depreciation expense at the end of year 1 using the straight-line method is option B: Depreciation Expense - Equipment 1,200 and Accumulated Depreciation - Equipment 1,200.

The straight-line method allocates the cost of an asset evenly over its useful life.

In this case, the equipment has a total cost of $3,600 and a three-year life, so the annual depreciation expense would be $3,600 divided by 3 years which equals $1,200.

Accumulated Depreciation represents the total depreciation recorded over the years, and at the end of year 1, it would also be $1,200.