Question 10BE - Intermediate Accounting (Kieso)

Question

BE3-10 (L03) At the end of its first year of operations, the trial balance of Alonzo Company shows Equipment \(30,000 and zero balances in Accumulated Depreciation—Equipment and Depreciation Expense. Depreciation for the year is estimated to be \)2,000. Prepare the adjusting entry for depreciation at December 31, and indicate the balance sheet presentation for the equipment at December 31.

Step-by-Step Solution

Answer

The net equipment value is $28,000.

Meaning of Balance Sheet

A statement that includes the detail of assets owned and liabilities owed by business entities or individuals at any definite date is known as the Balance Sheet. Stakeholders use it to assess the financial position of entities. 

Adjusting entry for depreciation at December

Date	Accounts and Explanation	Debit $	Credit $
December, 31	Depreciation expenses	$2,000
	Accumulated depreciation-equipment		$2,000

Balance sheet presentation for Equipment

Property Plant and Equipment	Amount $	Amount $
Equipment	$30,000
Less: Depreciation on equipment	$(2,000)
Equipment net of depreciation		$28,000