Reed Company paid $18,000 to purchase equipment on January 1, 2013. Reed Company has a December 31

Question:

Reed Company paid $18,000 to purchase equipment on January 1, 2013. Reed Company has a December 31 fiscal year end and uses straight-line depreciation. The company estimates the equipment will have a six-year useful life.

(a) Prepare the journal entry to record the purchase of the equipment on January 1, 2013.

(b) Prepare the adjusting entries required on December 31, 2013 and 2014.

(d) What amount of depreciation expense will be included in the 2013 and 2014 income statements?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...