Big Rig Delivery Service has the following plant assets: Communications Equipment: Cost, $3,840 with useful life of 8 years; Delivery Equipment: Cost, $17,568 with useful life of 12 years; and Computer: Cost, $13,440 with useful life of 4 years. Assume the residual value of all the assets is zero and the straight-line method is used. Big Rig's monthly depreciation journal entry will include a ________.
A) debit to Depreciation Expense - Equipment of $5,304
B) credit to Depreciation Expense - Equipment of $5,304
C) debit to Accumulated Depreciation - Equipment of $442
D) credit to Accumulated Depreciation - Equipment of $442

Question

Quizplus · Accepted Answer

To calculate monthly depreciation for each asset, divide the cost by the useful life in months. Communications Equipment: $3,840 / (8*12) = $40/month. Delivery Equipment: $17,568 / (12*12) = $122/month. Computer: $13,440 / (4*12) = $280/month. Total monthly depreciation = $40 + $122 + $280 = $442. The journal entry to record depreciation includes a debit to Depreciation Expense and a credit to Accumulated Depreciation for $442.

Big Rig Delivery Service Has the Following Plant Assets: Communications