question 39\n2.5 pts\non july 1, 2024, abc company purchases equipment for $200,000. the equipment is…

question 39\n2.5 pts\non july 1, 2024, abc company purchases equipment for $200,000. the equipment is expected to be used for the next four years, and have no residual value at the end of the four years. what adjusting entry should the company record on december 31, 2024?\ndebit depreciation expense and credit accumulated depreciation for $25,000\ndebit equipment and credit cash for $200,000\ndebit depreciation expense and credit accumulated depreciation for $50,000\ndebit equipment and credit depreciation expense for $25,000

question 39\n2.5 pts\non july 1, 2024, abc company purchases equipment for $200,000. the equipment is expected to be used for the next four years, and have no residual value at the end of the four years. what adjusting entry should the company record on december 31, 2024?\ndebit depreciation expense and credit accumulated depreciation for $25,000\ndebit equipment and credit cash for $200,000\ndebit depreciation expense and credit accumulated depreciation for $50,000\ndebit equipment and credit depreciation expense for $25,000

Answer

Explanation:

Step1: Calculate annual depreciation

The equipment cost is $200,000 with no residual value and a 4 - year useful life. Using the straight - line depreciation method, the annual depreciation $D=\frac{Cost - Residual\ Value}{Useful\ Life}=\frac{200000 - 0}{4}=50000$ per year.

Step2: Determine depreciation for half - year

The equipment was purchased on July 1, 2024, and the adjusting entry is made on December 31, 2024 (6 months or half - year). So the depreciation expense for 2024 is $\frac{50000}{2}=25000$.

Step3: Identify the adjusting entry

The adjusting entry for depreciation is to debit Depreciation Expense (increases an expense) and credit Accumulated Depreciation (a contra - asset account).

Answer:

Debit Depreciation Expense and credit Accumulated Depreciation for $25,000