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.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 to record annual depreciation using the straight-line method is to debit Depreciation Expense and credit Accumulated Depreciation for the same amount. In this case, the annual depreciation is $15,000, which means the entry should be Debit Depreciation Expense $15,000 and credit Accumulated Depreciation $15,000. Therefore, option E is the correct answer.

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