On July 1, 2010, Dexter Corp. buys a computer system for $260,000 in cash. Assum

Question

On July 1, 2010, Dexter Corp. buys a computer system for $260,000 in cash. Assume that the computer is expected to have a four- year life and an estimated salvage value of $20,000 at the end of that time.
Prepare the journal entry to record the purchase of the computer on July 1, 2010.
Compute the depreciable cost of the computer.
Using the straight-line method, compute the monthly depreciation.
Prepare the adjusting entry to record depreciation at the end of July 2010.
Compute the computers’ carrying value that will be shown on Dexter’s balance sheet prepared on December 31, 2010.

Explanation / Answer

Depericiation expense - Computers $5,000 Accumulated Deperciation - computers $5,000 (To record the deperciation for the month July 2010) ------------------------------------------------------------------------------------- Assets Computers $260,000 less: Accumulated Deperciation - comuters $30,000 Net carrying Value $230,000

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