Manhattan Park adjusts its books each month and closes its books on December 31 each year. The trial balance at January 31, of the current year, before adjustments, follows:

-Refer to the above data. The equipment has an original estimated useful life of six years. Compute the book value of the equipment at January 31 after the proper January adjustment is recorded:
A) $1,000.
B) $71,000.
C) $53,000.
D) $60,000.

Question

Manhattan Park adjusts its books each month and closes its books on December 31 each year. The trial balance at January 31, of the current year, before adjustments, follows:
 
-Refer to the above data. The equipment has an original estimated useful life of six years. Compute the book value of the equipment at January 31 after the proper January adjustment is recorded:
A) $1,000. 
B) $71,000. 
C) $53,000. 
D) $60,000.

Quizplus · Accepted Answer

The book value is calculated by subtracting accumulated depreciation from the original cost. If the equipment has an original estimated useful life of six years, the annual depreciation is the original cost divided by six. After recording the January adjustment, the accumulated depreciation for one month is added to the previous accumulated depreciation, and this is subtracted from the original cost to find the book value.

Manhattan Park Adjusts Its Books Each Month and Closes Its