Question

Jennifer Brent Corporation owns equipment that cost \(80,000 and has a useful life of 8 years with no salvage value. On January 1, 2017, Jennifer Brent leases the equipment to Donna Havaci Inc. for 1 year with one rental payment of \)15,000 on January 1. Prepare Jennifer Brent Corporation’s 2017 journal entries.

Short answer

The amount of accumulated depreciation calculated is $10,000.

Step-by-step solution

Meaning of Accumulated Depreciation

Theentire amount that a company's assets decline over timeis known as accumulated depreciation. Accumulated depreciation can be found by dividing equipment cost by total useful life.

Preparing Journal Entries

Date	Particular	Debit ($)	Credit ($)
	Cash	15,000
	Rent Revenue		15,000
	Depreciation Expense	10,000
	Accumulated Depreciation		10,000

Working Notes:-

Calculation of Accumulated Depreciation

$$\begin{gathered} \text{Accumulated}\text{depreciation =}\frac{\text{Equipment}\text{cost}}{\text{Useful}\text{life}} \\ =\frac{\$80,000}{8} \\ =\$10,000 \end{gathered}$$