Tracy, Inc.

-Refer to the trial balance of Tracy, Inc.Round calculations to the nearest dollar.)
If the equipment had an estimated useful life of five years and no salvage value, what is its book value at July 31, after the proper monthly July adjustment is recorded?

Question

Tracy, Inc.
 
-Refer to the trial balance of Tracy, Inc.Round calculations to the nearest dollar.)
If the equipment had an estimated useful life of five years and no salvage value, what is its book value at July 31, after the proper monthly July adjustment is recorded?

Quizplus · Accepted Answer

The equipment account's original balance was $76,000, and it has been in use for four years, meaning it has depreciated $60,800 ($76,000/5 years × 4 years). The monthly depreciation expense is therefore $1,010 ($60,800 ÷ 12 months). The proper monthly July adjustment, assuming no salvage value, would be a debit to Depreciation Expense for $1,010 and a credit to Accumulated Depreciation for $1,010. This would bring the equipment's book value at July 31 to $15,167 ($76,000 – $60,800 – $1,010).

Tracy, Inc. -Refer to the Trial Balance of Tracy, Inc.Round Calculations to Tracy