On January 1, 2016, the Marlin Company purchased a tractor that cost $30,000, had a five-year useful life, and a $5,000 salvage value. Which of the following is the correct general journal entry to record depreciation expense for the 2016 fiscal year?
A) Dr. Depreciation Expense $6,000 Cr. Accumulated depreciation $6,000
B) Dr. Accumulated depreciation $5,000 Cr. Depreciation expense $5,000
C) Dr. Depreciation expense $5,000 Cr. Cash $5,000
D) Dr. Depreciation expense $5,000 Cr. Accumulated depreciation $5,000

Question

Quizplus · Accepted Answer

Depreciation expense is recorded as an expense in the income statement and the accumulated depreciation account is a contra asset account that contains the total amount of depreciation expense recorded over the asset's useful life. Therefore, the correct entry to record depreciation expense is to debit (increase) the depreciation expense account and credit (increase) the accumulated depreciation account. Option A records too much depreciation expense in the first year, option B records the salvage value instead of the depreciation expense, and option C records a cash transaction instead of a non-cash expense. Option D records the correct entry by debiting depreciation expense $5,000 and crediting accumulated depreciation $5,000.

On January 1, 2016, the Marlin Company Purchased a Tractor