Question

Dalton Inc sold a piece of manufacturing equipment for $20,000 on June 30, 2019. They originally bought the equipment for $33,000 on January 1, 2016. Dalton estimated the equipment had a 4 year useful life with a $1,000 salvage value. Dalton has been using the straight-line method to depreciate the equipment. The balance in the Accumulated Depreciation account for the equipment on June 30, 2019 just prior to the sale was $24,000. The adjusting entry Dalton must make on June 30 will include which of the following?

A debit to Depreciation Expense for $8,000
	A debit to Depreciation Expense for $4,000
	A debit to Accumulated Depreciation for $8,000
	A debit to Accumulated Depreciation for $4,000
	Some other answer

Answer 1

Correct answer------------A debit to Depreciation Expense for $4,000

.

Before the sales is made the adjusting entry will be recorded for depreciation expense for the partial year.

Straight line Method
A	Cost	$ 33,000
B	Residual Value	$ 1,000
C=A - B	Depreciable base	$ 32,000
D	Life [in years left ]	4
E=C/D	Annual SLM depreciation	$ 8,000

6 month's depreciation will be recorded in 2019 as shown below

Depreciation schedule-Straight line method
Year	Book Value	Depreciation expense	Accumulated Depreciation	Ending Book Value
2016	$          33,000.00	$               8,000.00	$                8,000.00	$              25,000.00
2017	$          25,000.00	$               8,000.00	$             16,000.00	$              17,000.00
2018	$          17,000.00	$               8,000.00	$             24,000.00	$                 9,000.00
2019	$            9,000.00	$               4,000.00	$             28,000.00	$                 5,000.00