Question

If a fixed asset, such as a computer, were purchased on January 1st for $1,956.00 with an estimated life of 5 years and a salvage or residual value of $102.00, what is the journal entry for monthly expense under straight-line depreciation?

Select the correct answer.

a) Accumulated Depreciation$370.80

Depreciation Expense$370.80

b) Depreciation Expense$30.90

Accumulated Depreciation$30.90

c) Depreciation Expense$370.80

Accumulated Depreciation$370.80

d) Accumulated Depreciation$30.90

Depreciation Expense$30.90

Answer 1

Answer:option C

Depreciation Expense A/c Dr $370.80

To Accumulated Depreciation Cr $370.80

Explanation is as follows

under straight line method,

Depreciation = [cost - salvage value ]/useful life

GIven cost =$1956.00

Salvage value=$102

useful life =5 years

Depreciation =[$1956-$102]/5

   =$370.80

fixed assets of the company are depreciated by charging the depreciation expenses. This depreciation expense adds the balance of the accumulated depreciation account and does not directly credit the cost of the respective asset because as per the requirement of the accounting standards, companies are required to show the cost of the fixed assets as well as the related accumulated depreciation of that asset in the financial statements of the company.

In order to record such depreciation on the fixed assets in the books of accounts of the company, depreciation expenses account is debited and the accumulated depreciation account is credited. The entry to record accumulated depreciation is as below: