On May 1, Chicago Gold Exchange paid cash of $28,800 for computers that are expected to remain useful for four years. At the end of four years, the value of the computers is expected to be zero.
Requirements
1. Calculate the amount of depreciation for the month of May using the straight-line depreciation method.
2. Record the adjusting entry for depreciation on May 31.
3. Post the purchase of May 1 and the depreciation on May 31 to T-accounts for the following accounts: Computer Equipment, Accumulated Depreciation—Computer Equipment, and Depreciation Expense—Computer Equipment. Show their balances at May 31.
4. What is the computer equipment’s book value on May 31?