Answer:
Explanation:
a. The journal entry is
Equipment A/c Dr $50,400
To Cash A/c $50,400
(Being the equipment is purchased for cash)
Depreciation expense A/c Dr $5,400 ($600 × 9 months)
To Accumulated depreciation - Equipment A/c $5,400
(Being the depreciation expense is recorded)
b. The balance is
For depreciation expense, it is $5,400
And, for the accumulated depreciation it is $5,400
The depreciation is the reduction in the book value of the fixed assets over its useful period of time. It is the non-cash expense that does not reduce the cash balance but only increases the expenses and reduces the book value of the fixed asset at the year-end.
a. & b.
The journal entries for the purchase of equipment and the adjusting entry for the depreciation are attached in the image below.
c. The amount of depreciation and accumulated depreciation is $5,400.
Computation:
Given,
cost of depreciation= $600 per month
months= 9
[tex]\text{Depreciation}=\text{Rate per month}\times\text{No. of months}\\=\$600\times9\;\text{months}\\=\$5,400[/tex]
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