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For each separate case below, follow the three-step process for adjusting the Accumulated Depreciation account at December 31.
For each separate case below, follow the three-step process for adjusting the Accumulated Depreciation account at December 31. 1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
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 $13,500 balance to start the year. A review of depreciation schedules reveals that $14,600 of depreciation expense must be recorded for the year Accumulated depreciation
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
B. The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to have zero value at the end of the five years.
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to be valuedd at the end of the seven years.
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
Answer:The three-step process for adjusting the Accumulated Depreciation account at December 31.A. The Krug Company's Accumulated Depreciation account has a $13,500 balance to start the year. A review of depreciation schedules reveals that $14,600 of depreciation expense must be recorded for the year Accumulated depreciationSteps:1. Determine what the current account balance equals.The Accumulated Depreciation account has$13,500credit balance.2. Determine what the current account balance should equal.The Accumulated Depreciation account should equal$28,100($13,500 + $14,600) = balance + depreciation charge for the year.3. Record the December 31 adjusting entry to get from step 1 to step 2Debit Depreciation Expenses $14,600Credit Accumulated Depreciation $14,600To record the depreciation charge for the period.B. The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to have zero value at the end of the five years.1. Determine what the current account balance equals.Accumulated Depreciation account should equal zero.2. Determine what the current account balance should equal.The Accumulated Depreciation account, credit balance should equal $8,800.3. Record the December 31 adjusting entry to get from step 1 to step.Debit Depreciation Expenses $8,800Credit Accumulated Depreciation $8,800To record depreciation charge for the period.Explanation:Adjusting entries are prepared at the end of an accounting period to being the accounts to the accrual basis from the state of the cash basis. The purpose is to reflect on transactions that took place instead of emphasizing the receipt and payment of cash. These entries, therefore, agree with the accrual concept which requires that transactions be recognized based on the period to which the expense or revenue is incurred or earned instead of when cash payment or receipt takes place....