On April 1st, the company borrows $30,000 from the bank and signs a note. The company plans on repaying the note five years later. The bank charges 6% annual interest.

On December 31st (the adjusting entry):

The debit should be:

The credit should be:

The amount should be:

The company purchases equipment for $60,000 on August 1, 2016. The equipment will be useful for 10 years. The company records an adjusting entry for depreciation at the end of each year.

On December 31, 2016 (the adjusting entry):

The debit should be:

The credit should be:

The amount should be: