The Delivery Equipment account in the ledger of A Co has a balance of $17 600 which is the cost of two 2^nd hand trucks purchased on 1 January 2015. The Accumulated Depreciation Delivery Equipment account has a balance on 31 December 2016 of $8000, before adjusting entries. No additional delivery trucks have been acquired or sold. The residual value of each truck is estimated to be $800 and the straight-line depreciation method is used. What is the necessary adjusting entry to record annual depreciation on 31 December 2017?
Debit Credit

Question

Quizplus · Accepted Answer

The annual depreciation for one hand truck is ($17,600 - $800) / 2 / 3 = $2,933.33. Since the balance of Accumulated Depreciation Delivery Equipment account is $8,000 before adjusting entries, the adjusting entry would be to debit Depreciation Expense for $2,933.33 and credit Accumulated Depreciation for $2,933.33 per hand truck, which totals to $5,866.67 ($2,933.33 x 2). Therefore, the correct entry is D, Depreciation Exp. $4000 and Accumulated Depreciation Delivery Equipment $4000.

The Delivery Equipment Account in the Ledger of a Co