Question

On January 1, a company purchased equipment that cost $10,000. The company has not yet recorded depreciation, which is estimated at $1,800 per year. The company will prepare financial statements at the end of January. Complete the necessary adjusting entry by selecting the account names and dollar amounts from the drop-down menus.

Answer 1

The adjusting entry is:

Debit Depreciation Expense - Equipment $1,800

Credit Accumulated Depreciation - Equipment $1,800

To record depreciation expense.

Step-by-step explanation:

The adjusting journal entry records the depreciation expense for the year and adds the expense to the accumulated depreciation account. The accumulated depreciation account is a contra account to the Equipment account. The purpose that this contra account serves is to keep the Equipment account at its cost value while the gradual write-off of its value is reflected in an opposite account.