Question

Amazing Race Chapter 9 Leg #1 Wicked Widgets Company manufactures widgets for all types of uses. On January 1, 2013 Wicked Widgets purchased a new piece of equipment (for cash) which makes super widgets for $550,000. The equipment’s expected useful life is 15 years and has an expected residual value of $20,000. Wicked Widgets uses straight-line depreciation calculated yearly. Record the journal entries for 2013. (Round to the nearest dollar)

Answer 1

depreciation annual amount on Straight line depreciation method = (Cost - residual)/Useful life = (550000-20000)/15 = $35333

Journal entry:

Date	Accounts Title	Debit $	Credit $
Dec 31, 2013	Depreciation expense	35333
	Accumulated Depreciation-Equipment		35333
	(depreciation expense on equipment recorded)