Question

Willow Creek Company purchased and installed carpet in its new general offices on April 30 for a total cost of $18,000. The carpet is estimated to have a 15-year useful life and no residual value.A. Prepare the journal entry necessary for recording the purchase of the new carpet.B. Record the December 31 adjusting entry for the partial-year depreciation expense for the carpet, assuming that Willow Creek Company uses the straight-line method.

Answer 1

Entries are given below

Step-by-step explanation:

Requirement A: Purchase of New Carpet on April 30

DEBIT CREDIT

Carpet $18,000

Cash 18,000

Requirement B: Depreciation Entry

Calculation

Annual Depreciation = 18000/15years = 1200

8 Monthths Depreciation = 1200 x 8/12 = 800

8 months = 1 May to Dec 31

DEBIT CREDIT

Depreciation Expense $800

Accumulated Depreciation $800