on january 1, 2024 a company purchased new equipment for $50,000 cash. the company will depreciate the…
on january 1, 2024 a company purchased new equipment for $50,000 cash. the company will depreciate the equipment evenly over its estimated useful life of 5 years (this is $10,000 per year). what adjusting entry should be made on december 31, 2024? (assume that no financial statements were prepared during the year and no adjusting entries have been recorded.)\nmultiple choice\naccount debit credit\naccumulated depreciation 10,000\ndepreciation expense 10,000\n\naccount debit credit\nequipment 10,000\naccumulated depreciation 10,000\n\naccount debit credit\ndepreciation expense 10,000\naccumulated depreciation 10,000\n\naccount debit credit\ndepreciation expense 50,000\ncash 50,000
Answer
Explanation:
Step1: Understand depreciation accounting
Depreciation expense is recognized to allocate the cost of an asset over its useful - life. Accumulated depreciation is a contra - asset account.
Step2: Determine the adjusting entry
At the end of the year, we need to record the depreciation expense for the year and increase the accumulated depreciation. The depreciation expense for the year is $10,000. We debit Depreciation Expense (to recognize the expense) and credit Accumulated Depreciation (to increase the contra - asset account).
Answer:
| Account | Debit | Credit |
|---|---|---|
| Depreciation Expense | 10,000 | |
| Accumulated Depreciation | 10,000 |