On January 1, 2023, Taco Taqueria, a Mexican restaurant, purchased equipment for $12,000 cash. Taco Taqueria estimates that the equipment will last five years (useful life). The restaurant expects to sell the equipment for $2,000 at the end of five years. Taco Taqueria prepares financial statements on an annual basis and has a December 31 yearend.
a. Record the journal entry on January 1, 2023.
b. What is the formula to calculate straight-line depreciation?
c. Using the straight-line depreciation method, calculate the annual depreciation for 2023 (Jan. 1 to Dec. 31, 2023).
d. In order to prepare the annual financial statements, record the adjusting journal entry for depreciation on December 31, 2023.

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Jan. 1, 2023 Jan. Feb. Mar. Apr. May June July 2023 Aug. Sept. Oct. Dec. 31, 2023 Nov. Dec. Equipment will last five years (2023-2027)