Question
Part I Claudia is learning about depreciation and she is getting a little frustrated with the idea of accumulated depreciation. Why cant you just debit
Part I
Claudia is learning about depreciation and she is getting a little frustrated with the idea of accumulated depreciation. "Why cant you just debit depreciation expense and credit equipment?" She complains. "It would be so much easier that way!"
(1) What type of account is accumulated depreciation and why does it get used in the depreciation of fixed assets instead of doing it Claudia's way?
(2) Does accumulated depreciation have a debit balance or a credit balance?
Part II
Benny, an inexperienced accountant at Ace Plus, is about to post the monthly depreciation entries for the company's fixed assets. The depreciation amounts have already been calculated on a spreadsheet by the owner, who is not very knowledgeable in accounting. Benny's instructions are to post the following depreciation amounts for the month:
Building - $1,100
Land - 500
Equipment - 800
What will Benny's journal entries look like if they are done correctly? Can each item "share" an accumulated depreciation account or should each type of asset have its own? You must make the actual journal entries. Do not just describe them.
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