Super Clean Dry Cleaning purchased a new piece of office equipment on January 1, 2009, for $18,000 cash. The company expects to use the equipment for three years and thinks it will be worthless at the end of the three-year period. The company depreciates the equipment in equal annual amounts.

1. Show the adjustments in an accounting equation worksheet for the first two years of depreciation.
2. Prepare the asset section of the balance sheet at December 31, 2009, and December 31, 2010, after appropriate adjustments.
3. What amount of depreciation expense will be shown on the income statement for the year ended December 31, 2009? What amount will be shown for the year ended December 31, 2010?
4. Calculate the total depreciation for the life of the asset. What do you notice about the book value of the asset at the end of its useful life?

  • CreatedSeptember 01, 2014
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