Victory Company purchases office equipment at the beginning of the year at a cost of $15,000.The machine's useful life is estimated to be 7 years with a $1,000 salvage value.The journal entry to record the first year depreciation is:
A)Debit Depreciation Expense $2,143,credit Accumulated Depreciation $2,143.
B)Debit Depreciation Expense $2,000,credit Office Equipment $2,000.
C)Debit Office Equipment $2,000,credit Accumulated Depreciation $2,000.
D)Debit Accumulated Depreciation $2,143;credit Office Equipment $2,143.
E)Debit Depreciation Expense $2,000,credit Accumulated Depreciation $2,000.

Question

Quizplus · Accepted Answer

The depreciation expense for the first year is calculated as follows: 
Total Depreciation Expense = (Cost of Asset - Salvage Value) / Useful Life 
= ($15,000 - $1,000) / 7 
= $2,000

Therefore, the journal entry to record the first year depreciation would be: 
Debit Depreciation Expense $2,000 
Credit Accumulated Depreciation $2,000

Option E is the correct answer because it reflects the correct account debited and credited for the first year depreciation entry.

Victory Company Purchases Office Equipment at the Beginning of the Year