Suppose that on January 1 Foreton Golf Company paid cash of $50,000 for computers that are expected to remain useful for five years. At the end of five years, the computers’ values are expected to be zero.
1. Make journal entries to record
(a) Purchase of the computers on January 1 and
(b) Annual depreciation on December 31. Include dates and explanations, and use the following accounts: Computer Equipment; Accumulated Depreciation—Computer Equipment; and Depreciation Expense—Computer Equipment.
2. Post to the accounts and show their balances at December 31.
3. What is the computer equipment’s book value at December 31?