Question

On august 1 the darius co. purchased a photocopy machine for $8,000. the estimated annual depreciation on the machine is $1,680. if the company prepares annual financial statements on december 31, the appropriate adjustment to make on december 31 of the first year would be

Answer 1

To determine the appropriate adjustment to make on December 31 of the first year for depreciation on photocopy machine;

It is given that the annual depreciation on the machine is $1,680. The machine was purchased on August 1 and the company prepares annual financial statements on December 31, so the adjustment of the depreciation expense shall be made for the period (August 1 to December 31) = 5 months

The depreciation for 5 months shall be = 1680*5/12 = $700

Hence, the adjustment at the end of the year shall be made for Depreciation expense of $700.

The Adjusting entry shall be as follows:

Depreciation Expense Debit $700

Accumulated Depreciation Credit $700