The Harris Company Ltd purchased a computer for $3,000 on 1 December. It is estimated that annual depreciation on the computer will be $600. If financial statements are to be prepared on 31 December, the company should make the following adjusting entry:
A) Debit Depreciation expense, $600; Credit Accumulated depreciation, $600.
B) Debit Depreciation expense, $50; Credit Accumulated depreciation, $50.
C) Debit Office equipment $2,400; Credit Accumulated depreciation, $2,400.
D) Debit Office equipment, $3,000; Credit Accumulated depreciation, $3,000.

Question

Quizplus · Accepted Answer

The adjusting entry required on 31 December is Debit Depreciation expense, $50; Credit Accumulated depreciation, $50. This is the amount of the benefit from the use of the computer that has been consumed at 31 December ($600/12).

The Harris Company Ltd Purchased a Computer for $3,000 on 1