On January 1, ABC Catering purchased an oven for $5,000. The oven is expected to last five years and have no salvage value. Select the adjusting entry made on December 31, to record the depreciation of the oven for one year.

Question

Quizplus · Accepted Answer

The adjusting entry to record the depreciation of the oven for one year is to debit Depreciation Expense (an income statement account) and credit Accumulated Depreciation--Equipment (a balance sheet account). Option A is incorrect as it only records half of the proper amount of depreciation. Option B is incorrect as it debits the wrong account (Equipment instead of Depreciation Expense). Option C is incorrect as it inaccurately increases the Equipment account instead of showing a decrease in its value due to depreciation. Therefore, the correct answer is D.

On January 1, ABC Catering Purchased an Oven for $5,000