Hercules Company purchased a computer for $4,800 on December 1. It is estimated

Question

Hercules Company purchased a computer for $4,800 on December 1. It is estimated that annual depreciation on the computer will be $960. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:
Debit Depreciation Expense, $960; Credit Accumulated Depreciation, $960.
Debit Depreciation Expense, $80; Credit Accumulated Depreciation, $80.
Debit Depreciation Expense, $3,840; Credit Accumulated Depreciation, $3,840.
Debit Office Equipment, $4,800; Credit Accumulated Depreciation, $4,800.

Explanation / Answer

$80 to depreciation expense as the computer was only used 1 month (1/12 of a year).

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