Store equipment is purchased on January 1, 2002 at a cost of $14,000 and $1,000

Question

Store equipment is purchased on January 1, 2002 at a cost of $14,000 and $1,000 was spent on its installation. The depreciation is written-off at 10% on the original cost every year. The books are closed on December 31, every year.

Instructions:
Prepare a Depreciation Expense-Stores Equipment Account and an Accumulated Depreciation-Stores Equipment Account.



A company acquired office equipment on January 1, 2001 at a cost of $40,000 and spent $1,000 on its installation. The company writes-off depreciation at 10% using the reducing balance method. The accounting books are closed on December 31 each year.

Instructions:
Show the depreciation account for three years.

Explanation / Answer

1. DR Depreciation expense 1,500 (14,000+1,000)*.10 CR Accumulated Depreciation 1,500 Yearly entry 2. DR Depreciation expense 4,100 (40,000+1,000)*.10 CR Accumulated depreciation 4,100 Year 1 DR Depreciation expense 3,690 (41,000-4,100)*.10 CR Accumulated depreciation 3,690 Year 2 DR Depreciation expense 3,321 CR Accumulated depreciation 3,321 (41,000-4,100-3,690)*.10 Year 3

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