Adjusting Entries Practice Problem Depreciation Expense Solution

 

Selected Account balances as of September 30, 2000:
		Cleaning Equipment - debit               $64,400
		Accumulated Depreciation - credit      37,700
		Depreciation Expense  - debit               8,200
Required:	Write the adjusting journal entry for the month ended September 30 based on the following information:
	The cleaning equipment was purchased on April, 1998. It has a 4-year useful life and a $2,000 salvage value.
Solution:	Purpose: To record the depreciation expense for the period.
	Accounts:	Balance Sheet:        Accumulated Depreciation
		Income statement:   Depreciation Expense
	Calculation:	Annual depreciation = (Cost - Salvage value) x (1 / Years of useful life)
		Depreciation for 1 month = [ ($64,400 - $2,000) x ( 1/ 4 ) x ( 1/12 ) ] = $1,300

	Date	Account Titles	Debits	Credits
	Sept. 30	Depreciation Expense	$1,300
		Accumulated Depreciation		1,300
		To record the month's depreciation expense.

 

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