Question

On January 1, 2022, Ivanhoe Creek Country Club purchased a new riding mower for $15,400. The mower is expected to have a 10-year life with a $2,700 salvage value.What journal entry would Ivanhoe Creek make on December 31, 2022, if it uses straight-line depreciation? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

Depreciation expense Dr, $1,270

To Accumulated depreciation $1,270

(Being depreciation expenses is recorded)

Working note

Depreciation per year using SLM = (Cost - Salvage value) ÷ Useful life

= ($15,400 - $2,700) ÷ 10

= $12,700 ÷ 10

= $1,270

For recording the depreciation expenses we simply debited the Depreciation expense and credited the accumulated expenses.