To record depreciation expense per year for the van's lifespan, you would debit the Depreciation Expense account and credit the Accumulated Depreciation account. Each year, the same journal entry would be recorded until the van reaches its estimated residual value.
Journal Entry
Debit: Depreciation Expense
Credit: Accumulated Depreciation
Depreciation is the systematic allocation of the cost of an asset over its useful life.
In this case, the van has a useful life of five years.
To record the depreciation expense per year, you would debit the Depreciation Expense account and credit the Accumulated Depreciation account.
The journal entry for the first year would be:
- Debit Depreciation Expense: $4,000
- Credit Accumulated Depreciation: $4,000
The journal entry for the second year would be:
- Debit Depreciation Expense: $4,000
- Credit Accumulated Depreciation: $4,000
The same journal entry would be recorded for each subsequent year until the van reaches its estimated residual value of $10,000 at the end of its useful life.
This entry reflects the systematic allocation of the van's cost over its useful life.
The Depreciation Expense account is debited to recognize the expense on the income statement, and the Accumulated Depreciation account is credited to show the total depreciation accumulated over time on the balance sheet.
question:
Puppy Power Wash purchased a van for $30,000. They believe it will be useful for five years and will be worth $10,000 at the end of the five years. Make a journal entry to record a depreciation expense per year of the van's lifespan. which account is debited