Reference no: EM133129760

Question - Suppose your company purchases a building at a cost of $480,000 and estimates it's useful life to be 20 years. Determine the monthly journal entry for depreciation.

There are 240 months in 20 years, so the depreciation expense is $2,000 per month.

DR Depreciation Expense: Building 2,000

CR Accumulated Depreciation: Building 2,000

What would the balance sheet look like after 5 years (60 months)?

Assets:

Building $480,000

Less Accumulated Depreciation: Building 120,000 $360,000

YOUR TURN:

Your company purchased equipment for $25,000 with an estimated useful life of 5 years.

1. Write the journal entry for the cash purchase of this equipment on Jan 2, 2022.

2. Write the yearly journal entry for depreciation.

3. What would the balance sheet look like after 3 years (end of 2024)?

Your company purchased a bus for $75,000 with an estimated useful life of 10 years, at which time it is estimated to be sold off for $5,000.

1. Write the journal entry for the cash purchase of this bus on Jan 2, 2022.

2. Write the yearly journal entry for depreciation.

3. What would the balance sheet look like after 7 years (end of 2028)?

Your company purchased a building and land for $900,000. The land is estimated to be worth $200,000. The building has an estimated life of 25 years. Depreciation is recorded monthly.

1. Write the journal entry for the purchase of this property (20% cash down, rest on bank loan) on Jan 2, 2022.

2. Write the monthly journal entry for depreciation.

3. What would the balance sheet look like after 10 years (end of 2031)?