In: Accounting
On July 1, Andrew Company purchased equipment at a cost of $150,000 that has a depreciable cost of $120,000 and an estimated useful life of 3 years or 60,000 hours.
Required:
Using straight-line depreciation, prepare the journal entry to record depreciation expense for (a) the first year, (b) the second year, and (c) the last year on December 31. Refer to the Chart of Accounts for exact wording of account titles. |
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Andrew Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Using straight-line depreciation, prepare the journal entry to record depreciation expense for (a) the first year, (b) the second year, and (c) the last year on December 31. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 1
JOURNAL
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |
---|---|---|---|---|---|
1 |
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2 |
|||||
3 |
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4 |
|||||
5 |
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6 |
A |
Cost |
$ 150,000.00 |
B |
Residual Value |
$ 30,000.00 |
C=A - B |
Depreciable base |
$ 120,000.00 |
D |
Life [in years] |
3 |
E=C/D |
Annual SLM depreciation |
$ 40,000.00 |
F = E x 6/12 |
First Year Depreciation [for 6 months: 1 Jul to 31 Dec] |
$ 20,000.00 |
G |
Second year’s depreciation |
$ 40,000.00 |
H |
Third year’s depreciation |
$ 40,000.00 |
I = E x 6/12 |
Last Year’s depreciation for 6 months [1Jan to 30 June] |
$ 20,000.00 |
DATE |
DESCRIPTION |
POST. REF. |
DEBIT |
CREDIT |
|
1 |
31 Dec - First year |
Depreciation expense |
541 |
$ 20,000 |
|
2 |
Accumulated Depreciation |
122 |
$ 20,000 |
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3 |
31 Dec - Second year |
Depreciation expense |
541 |
$ 40,000 |
|
4 |
Accumulated Depreciation |
122 |
$ 40,000 |
||
5 |
31 Dec - Last Year or 30 June Last Year |
Depreciation expense |
541 |
$ 20,000 |
|
6 |
Accumulated Depreciation |
122 |
$ 20,000 |