A machine with a cost of $15,000,a salvage value of $3,000 and expected life of 20 years was purchased on September 1.For a calendar year company,the journal entry to record depreciation expense for the first year would be to:
A)debit Depreciation Expense,$50;credit Accumulated Depreciation,$50.
B)debit Depreciation Expense,$250;credit Accumulated Depreciation,$250.
C)debit Depreciation Expense,$200;credit Accumulated Depreciation,$200.
D)debit Depreciation Expense,$150;credit Accumulated Depreciation,$150.

Question

Quizplus · Accepted Answer

The annual depreciation expense can be calculated using the straight-line depreciation method:

Annual Depreciation Expense = (Cost - Salvage Value) / Useful Life
Annual Depreciation Expense = ($15,000 - $3,000) / 20
Annual Depreciation Expense = $600

Since the machine was purchased on September 1, we need to calculate the depreciation expense for the remaining four months of the year (September, October, November, and December):

Depreciation Expense = Annual Depreciation Expense x (Number of Months Remaining / 12)
Depreciation Expense = $600 x (4 / 12)
Depreciation Expense = $200

Therefore, the journal entry to record the depreciation expense for the first year would be:

Debit Depreciation Expense $200
Credit Accumulated Depreciation $200

Option C is the correct answer as the journal entry representing the $200 depreciation expense accrued in the first year of the asset.

A Machine with a Cost of $15,000,a Salvage Value of $3,000