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 $16,000 balance to start the year. A review of depreciation schedules reveals that $17,600 of depreciation expense must be recorded for the year. Debit or Credit? Accumulated depreciation Step 1: Determine what the current account balance equals. $ 16,000 17,600 Step 2: Determine what the current account balance should equal. $ 33,600 Credit Step 3: Record the December 31 adjusting entry to get from step 1 to step 2 Adjusting Entry Debit Depreciation expense 17,600 Accumulated depreciation 17,600 b. The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $49,000, had an estimated life of 5 years, and is expected to have zero value at the end of the 5 years. Step 1: Determine what the current account balance equals. Accumulated depreciation -Truck 0 9,800 Debit or Credit? Step 2: Determine what the current account balance should equal. $ 9,800 Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Debit Adjusting Entry Launchpad Credit M. FRIO LUIpany las viny UITO ITAGU O LUUN TAL I purchasgu al O LAILUI LIHTS year. Flat ASSOL RIAU LUL PT2, , lau ar estimated life of 5 years, and is expected to have zero value at the end of the 5 years. Step 1: Determine what the current account balance equals. Accumulated depreciation -Truck 0 9,800 Debit or Credit? Step 2: Determine what the current account balance should equal. $ 9,800 Credit Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Adjusting Entry Debit Depreciation expense-Truck 9,800 Accumulated depreciation-Truck 9,800 c. The company has only one fixed asset (equipment) that it purchased at the start of this year. That asset had cost $42,000, had an estimated life of 7 years, and is expected to be valued at $7,000 at the end of the 7 years. Accumulated depreciation -Equipment Step 1: Determine what the current account balance equals. Debit or Credit? 5,000 Step 2: Determine what the current account balance should equal. $ 5,000 step 2 Debit Credit Step 3: Record the December 31 adjusting entry to get from step 1 Adjusting Entry Depreciation expense-Equipment Accumulated depreciation-Equipment 5,000 5,000
