Question

Question: For each separate case below, follow the three-step process for adjusting the accumulated depreciation

account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine

what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get

from step 1 to step 2. Assume no other adjusting entries are made during the year.

a. Accumulated Depreciation. The Krug Company’s Accumulated Depreciation account has a \(13,500

balance to start the year. A review of depreciation schedules reveals that \)14,600 of depreciation

expense

must be recorded for the year.

b. Accumulated Depreciation. The company has only one fixed asset (truck) that it purchased at the

start of this year. That asset had cost \(44,000, had an estimated life of five years, and is expected to

have zero value at the end of the five years.

c. Accumulated Depreciation. The company has only one fixed asset (equipment) that it purchased at

the start of this year. That asset had cost \)32,000, had an estimated life of seven years, and is expected

to be valued at $4,000 at the end of the seven years.

Short answer

The depreciation account is debited with $14,600 and the accumulated depreciation account is credited with $14,600

Step-by-step solution

Step-by-Step SolutionStep 1: Depreciation of depreciation

Depreciation means the fall in the value of the machine by constant use.

Step 2:Current balance should equal

The current account balance equals $13,500

Current balance should equal

The current account balance should equal $28,100

Current balance

	Journal entry
Date	Particular	Debit	Credit
December 31	Depreciation expense	$14,600
	Accumulated Depreciation		$14,600
	(Being entry of the adjustment of depreciation expense)