Question

Depreciation on equipment for the year is $4,320. a. Record the journal entry if the company prepares adjustments once a year. If an amount box does not require an entry, leave it blank. b. Record the journal entry if the company prepares adjustments on a monthly basis. If an amount box does not require an entry, leave it blank.

Answer 1

a. Debit Depreciation expense account (p/l) $4,320

Cr Accumulated depreciation $4,320

Being entries to adjust for depreciation at year end

b. Debit Depreciation expense account (p/l) $360

Cr Accumulated depreciation $360

Being entries to account for monthly depreciation expense.

Step-by-step explanation:

Depreciation is the systematic allocation of the cost of an asset to the income statement over the estimated useful life of that asset.

It is determined as the depreciable value of the asset over the estimated useful life of the asset where the depreciable value is the difference between the cost and salvage value of the asset

Mathematically,

Depreciation = (Cost - Salvage value)/Estimated useful life

To record depreciation expense,

Debit Depreciation expense account (p/l)

Cr Accumulated depreciation

From the given information,

Monthly depreciation = $4,320/12

= $360