transaction analysis results in the development of a journal entry. A transactio

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transaction analysis results in the development of a journal entry. A transaction analysis results in the development of a journal entry. A transaction analysis results in the development of a journal entry. A Question 5 20 pts (TCO 3) Adjusting Entries are required at the end of the period to ensure that accrual accounting principles are applied. The building that houses the business is depreciated at an annual rate of $14,000. Develop the adjusting entry for year end. (1) Name the accounts impacted and how to use the format account name/debit or creditdollar amount (10 points), and (2) explain how the Accounting Equation is impacted. (10 points) HTML Editor

Explanation / Answer

As per the chegg's policy I am allowed to answer only the first question so please don't mind and ask other questions separately.

At the end of the year, to record the current year depreciation, an accounting entry needs to be made, which will impact the accumulated depreciation account and depreciation account.

Suppose the preliminary balance in accumulated depreciation is X.

Then in the credit side, for the account (accumulated depreciation):

Preliminary Balance: X

Adjusting entry - 14000

Correct balance - 14000+X

In depreciation expense, entry will be passed on debit side as:

Preliminary Balance - 0

Adjusting entry - 14000

Current balance - 14000

The accounting equation gets impacted as:

The accumulated depreciation expense will be increased and the book value of the equipment will decrease.

This adjusting entry will make depreciation account to be debited and hence reducing net income and shareholders Equity, and accumulated depreciation account to be credited.

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