Question

Sweet Stuff Co. purchases equipment with a cost of $36,400 and a trade-in value of $4,000. Sweet Stuff Co. estimates that the equipment will have a useful life of 9 years. Assuming Sweet Stuff Co. records depreciation for one month using the straight-line method, the adjustment would be recorded in the work sheet as a:

Select one:

a. credit to depreciation expense, $3,600.

b. debit to depreciation expense, $300.

c. credit to equipment, $300.

d. credit to accumulated depreciation, $3,600.

Answer 1

Answer:

The answer is option (b) debit to depreciation expense, $ 300.

Given data:

• Equipment cost - $ 36,400
• Trade in value - $ 4,000
• Useful life - 9 years

Depreciation for one month = ($ 36,400 - $ 4,000)/9 = $ 3,600 *1/12 months = $ 300

So, the answer is debit to depreciation expense, $ 300