Liam's Skate Sharpening estimated depreciation for office equipment at $200. The adjusting entry would include
A) a debit to Accumulated Depreciation for $200.
B) a credit to Depreciation Expense for $200.
C) a credit to Accumulated Depreciation for $200.
D) a credit to Office Equipment for $200.

Question

Quizplus · Accepted Answer

The adjusting entry for depreciation of office equipment involves crediting Accumulated Depreciation for the estimated depreciation amount of $200. This is because Accumulated Depreciation is a contra-asset account used to track the accumulated depreciation on an asset, and a credit entry to this account reduces the book value of the asset. Option A and B are incorrect because they involve debiting Depreciation Expense, which is the expense account used to record the depreciation expense for the period, and this is not involved in the adjusting entry for estimated depreciation. Option D is incorrect because it involves crediting Office Equipment, which is an asset account, and this would increase the book value of the asset instead of reducing it.

Liam's Skate Sharpening Estimated Depreciation for Office Equipment at $200