X Company prepares annual financial statements. On January 1, 2012, it purchased
ID: 2484874 • Letter: X
Question
X Company prepares annual financial statements. On January 1, 2012, it purchased a machine for $80,000. Its estimated useful life was 6 years and its estimated disposal value in 6 years was $7,000. Using straight-line depreciation, what is the adjusting entry on December 31, 2015?
Options:
Equipment and Retained Earnings both increase by $36,500
Equipment and Paid-In Capital both decrease by $12,167
Equipment and Retained Earnings both decrease by $36,500
Equipment and Retained Earnings both decrease by $12,167
Equipment and Paid-In Capital both decrease by $13,333
Equipment and Retained Earnings both decrease by $13,333
Explanation / Answer
Equipment and Retained Earnings both decrease by $12,167
Working
Depreciation/Year = ($80000-$7000)/6 =$12167
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