Exercise $3-5$ Preparing adjusting entries $($annual$)-$depreciation LO$4$

Mean Beans, a local coffee shop, has the following assets on January $1,2023.$ Mean Beans prepares annual financial statements and has a December $31,2023$ year$-$end. The company's depreciation policy is to use the straight$-$line method to depreciate its assets.

a$.$ On January $1,2023,$ purchase equipment costing $$15,400$ with an estimated life of five years. Mean Beans will scrap the equipment after five years for $$0.$

b$.$ On July $1,2023,$ purchase furniture $($tables and chairs$)$ costing $$15,500$ with an estimated life of ten years. Mean Beans estimates that it can sell the furniture for $$3,500$ after ten years.

c$.$ On January $1,2021,$ Mean Beans had purchased a car costing $$29,500$ with an estimated life of eight years. Mean Beans estimates that it can sell the car for $$5,900$ after eight years.

Required:

$1-$a$.$ For each transaction, calculate the current year's annual depreciation expense.

$\backslash$table$[[$a$.,$Annual depreciation expense on equipment,$],[$b$.,$Annual depreciation expense on furniture,$],[$c$.,$Annual depreciation expense on car,$]]$

$1-$b$.$ For each transaction, record the adjusting entry on December $31,2023.$

Journal entry worksheet

Prexy

$2$ of $8$

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