Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method,and only prepares adjustments at year-end.The adjusting entry needed to record annual depreciation is:
A)Debit Depreciation Expense,$15,000; credit Equipment,$15,000.
B)Debit Equipment,$15,000; credit Accumulated Depreciation,$15,000.
C)Debit Depreciation Expense,$10,000; credit Accumulated Depreciation,$10,000.
D)Debit Depreciation Expense,$10,000; credit Equipment,$10,000.
E)Debit Depreciation Expense,$15,000; credit Accumulated Depreciation,$15,000.

Question

Quizplus · Accepted Answer

The adjusting entry needed to record annual depreciation is to debit Depreciation Expense for the amount of $15,000 and credit Accumulated Depreciation for the same amount. This reflects the decrease in the value of the equipment over time as it continues to be used in the business. Option E is the only choice that matches this format.

Holman Company Owns Equipment with an Original Cost of $95,000