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Question - Beckett Baskets manufactures collectible baskets and other home goods carried by many retailers in the northeastern United States. The owner, Sam Beckett recently acquired new equipment on January 1, Year One that will enhance the manufacturing process, allowing for greater production. The equipment cost $37,000 and will be used for five years to generate revenue. At the end of the five years, Sam estimates the equipment will be worth $2,000 and the company uses straight-line depreciation.
What is the amount of depreciation to be recorded in the first year of operations?
Record the entries to purchase the equipment and the year-end adjusting entry for depreciation.
What impact does the adjusting entry have on the balance sheet?
What impact does the adjusting entry have on the income statement?
What impact does the adjusting entry have on the statement of cash flow?
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