Cycle Tech Bicycles purchased manufactur ing equipment on August 1 for $410,000. The equipment has an estimated useful life of 25 years and an estimated disposal value of $20,000. Cycle Tech uses the straight-line method of depreciation. The partial depreciation schedule found in your working papers is set up for the equipment. 

Instructions

1. Calculate annual depreciation, accumulated depreciation, and book value for each of the first two years. The fiscal year ends December 31. Use the form provided in your working papers.

2. Calculate the depreciation adjustment to be entered on the work sheet at the end of the first year. Use T accounts to show the accounts debited and credited.

3. Journalize the adjustment for depreciation at the end of the first year, general journal page 21.