Suppose your company purchases a building at a cost of $480,000 and estimates it's useful life to
Question:
Suppose your company purchases a building at a cost of $480,000 and estimates it's useful life to be 20 years. Determine the monthly journal entry for depreciation.
There are 240 months in 20 years, so the depreciation expense is $2,000 per month.
DR Depreciation Expense: Building 2,000
CR Accumulated Depreciation: Building 2,000
What would the balance sheet look like after 5 years (60 months)?
Assets:
Building $480,000
Less Accumulated Depreciation: Building 120,000 $360,000
YOUR TURN:
Your company purchased equipment for $25,000 with an estimated useful life of 5 years.
- Write the journal entry for the cash purchase of this equipment on Jan 2, 2022.
- Write the yearly journal entry for depreciation.
- What would the balance sheet look like after 3 years (end of 2024)?
Your company purchased a bus for $75,000 with an estimated useful life of 10 years, at which time it is estimated to be sold off for $5,000.
- Write the journal entry for the cash purchase of this bus on Jan 2, 2022.
- Write the yearly journal entry for depreciation.
- What would the balance sheet look like after 7 years (end of 2028)?
Your company purchased a building and land for $900,000. The land is estimated to be worth $200,000. The building has an estimated life of 25 years. Depreciation is recorded monthly.
- Write the journal entry for the purchase of this property (20% cash down, rest on bank loan) on Jan 2, 2022.
- Write the monthly journal entry for depreciation.
- What would the balance sheet look like after 10 years (end of 2031)?