Question

QS 3-8 Accumulated depreciation adjustments LO P1 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. The Krug Company's Accumulated Depreciation account has a $18,500 balance to start the year. A review of depreciation schedules reveals that $20,600 of depreciation expense must be recorded for the year. Accumulated depreciation 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. Debit Credit b. The company has only one fixed asset truck) that it purchased at the start of this year. That asset had cost $54,000, had an estimated life of 5 years, and is expected to have zero value at the end of the 5 years, Accumulated depreciation 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.

Answer 1

Requirements, as asked

[a]			Accumulated Deprecication
Step 1	$18,500	Credit		$18,500
Step 2	$39,100	Credit (18500+20600)		$20,600
				$39,100
Step 3	Accounts title	Debit	Credit
	Depreciation expense	$20,600
	Accumulated Depreciation		$20,600
[b]			Accumulated Deprecication - Truck
Step 1	$0			$0
Step 2	$10,800	Credit [($54000 - 0) / 5 years]		$10,800
				$10,800
Step 3	Accounts title	Debit	Credit
	Depreciation expense - Truck	$10,800
	Accumulated Depreciation - Truck		$10,800
[c]			Accumulated Deprecication-Equipment
Step 1	$0			$0
Step 2	$6,000	Credit [($52000 - 10000) / 7 years]		$6,000
				$6,000
Step 3	Accounts title	Debit	Credit
	Depreciation expense	$6,000
	Accumulated Depreciation - Equipment		$6,000