Laura Diamonds purchased a computer for $3,600 on December 1. It is estimated that the useful life of the computer will be 3 years. If financial statements are to be prepared on December 31, the company should make the following adjusting entry
A) debit Depreciation Expense, $100; credit Computer, $100.
B) debit Depreciation Expense, $100; credit Accumulated Depreciation, $100.
C) debit Depreciation Expense, $1,200; credit Accumulated Depreciation, $1,200.
D) debit Cash, $100; credit Accumulated Depreciation, $100.

Question

Quizplus · Accepted Answer

The computer's cost is $3,600 with a useful life of 3 years, resulting in an annual depreciation of $1,200 ($3,600/3). For one month (December), the depreciation is $100 ($1,200/12). The correct entry is to debit Depreciation Expense and credit Accumulated Depreciation for $100.

Laura Diamonds Purchased a Computer for $3,600 on December 1