In: Accounting
On January 1, Tolson Company purchased a building by paying $50,000. The building has an estimated life of 40 years and an estimated residual value of $10,000.
Prepare journal entries to record the purchase and the related year-end adjusting entry. |
Journal entries | ||||
Transaction | ACCOUNT TITLES AND EXPLANATIONS | DEBIT ($) | CREDIT ($) | |
1 | Building | $50,000.00 | ||
Cash | $50,000.00 | |||
(Being building purchased for cash) | ||||
2 | Depreciation Expense of Building | $1,000.00 | ||
Building | $1,000.00 | |||
(To record depreciation on building) | ||||
Explanation | ||||
Depreciation Expense of Building = ($50,000-$10,000) / 40 | ||||
= $1,000 |