Assuming the retailer uses the straight-line depreciation method, during each month of the display racks' lives the retailer's monthly income statement will report depreciation expense of $1,000. Accumulated depreciation is the cumulative depreciation of an asset up to a single point in its life. 6.2. a debit to Insurance Expense and a credit to Accumulated Depreciation. 4. Which of the following groups of accounts will have zero balances after the closing process is completed? By the end of the asset’s life, its cost has been fully depreciated and its net book value has been reduced to zero. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance … 19. During 2007, one piece of equipment was sold. False. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet: Accumulated Depreciation. Which one of the following accounts is both opened and closed during the closing process? Accumulated Depreciation-Office Equipment: 70: If not adjusted: Assets = Liabilities + Capital + Revenue-Expense = Capital: Over: over: under: Over : Balance Sheet Presentation Office Equipment $8400. Let us calculate the accumulated depreciation at the end of the financial year ended December 31, 2018, based on the following information: Gross Cost as on January 1, 2018: $1,000,000 False. B) … a. Each year when the accumulated depreciation journal entry is recorded, the accumulated depreciation account is increased. b. A. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. c. The company has only one fixed asset (equipment) that it purchased at the start of this year. Depreciation Expense. Accumulated depreciation-equipment 54,250,000 Buildings 97,300,000 Equipment 150,250,000 Land 22,300,000 The company uses straight-line depreciation for buildings and equipment… The equipment was sold for $25,000. Income Statement, Debit c. Balance Sheet, Debit d. Income Statement, Credit Accumulated depreciation formula after 3 rd year = Acc depreciation at the start of year 3 + Depreciation during year 3 = $40,000 + $20,000 = $60,000. This entry will add the current year depreciation expense with the previous year closing balance. One months worth … c. transferring journal entries to ledger accounts. A. . Allowance for doubtful accounts on 1/1/07 was $50,000. The entry also increases Accumulated Depreciation, which is the use of the asset and appears on the balance sheet under the Vehicles asset line. Company B is also selling its machine for $50,000, except they have not had it as long. a. They would then debit the $30,000 as accumulated depreciation and the $50,000 as cash. Adjusted Trial Balance, Credit b. 14,700. Accumulated Depreciation 5. The January 31 entry to record depreciation expense would include . The correct sequence of steps in the accounting cycle is to prepare the A. a. preparing a chart of accounts. Now there will be an adjusting entry if the depreciation expense is charges less or more from due to any reason. 6. Posting is the process of . It has the following information related to its non-current assets: Non-current assets Date acquired Cost Accumulated depreciation RM RM Machinery A 1 July 2016 25.000 9,375 Office equipment 1 April 2018 20,000 3,000 Depreciation on machineries is at the rate of 15% per annum on … Chapter – 6 During the closing process, Accumulated Depreciation, Equipment will be closed to the drawing account. Fees Earned. 63. a. In their books, they would record the $100,000 cost as a credit. D) Unearned Rent . a. 29. The preparation of a post-closing trial balance serves as a check on the accuracy of the closing process and ensures that the books are in balance at the start of the new accounting period. True. 62. Less-Accumulated Depreciation 70 $8330. The drawing account is closed to the income summary account. 1,300. a debit to Accumulated Depreciation and a credit to Prepaid Insurance. 5. The equipment had an original cost of $40,000 and was 3/4 depreciated when sold. Balance sheet column 8. And this process will be carry on till the life of asset. You can generate several fixed asset accounts to accommodate equipment, machinery, land, and vehicles. Balance sheet column 3. Recording asset depreciation in this way recognizes the use of assets in your business during the accounting period. Supplies 8. Prepare closing entries and post. The accumulated depreciation account is closed to the income summary account. Depreciation C. Accretion B. The Vehicle asset line always shows the value of the asset at the time of purchase. Accumulated Depreciation—Equipment $40 Notes Payable 5,000 Accounts Payable 2,500 Unearned Service Revenue 800 Salaries and Wages Payable 1,200 Interest Payable 50 Common Stock 10,000 Retained Earnings 2,360 $21,950 $21,950 • Harper prepares the post-closing … Unearned Fees 7. $0 During the closing process, what amount was transferred from the income summary account to the Capital account in the third closing entry (i.e., after revenue and expense accounts have been closed to Income Summary)? 30. The process of preparing the post-closing trial balance is the same as you have done when preparing the unadjusted trial balance and adjusted trial balance. Balance sheet column 7. You need to monitor depreciation in your financial records as well. A) Depreciation Expense and Accumulated Depreciation?Equipment. Warton Company depreciates its equipment at the rate of $500 per month. Accountants may perform the closing process monthly or annually. 3. Accumulated Depreciation is a real account/balance sheet account. This process is called depreciation. Supplies Expense 1. Income statement column 6. $0 What Is The Balance In The Retained Earnings Account? Presented below is the trial balance of the Crestwood Golf Club, Inc. as of December 31. For example, at December 31, 20X2, the net book value of the truck is $50,000, consisting of $150,000 cost less $100,000 of accumulated depreciation. Accumulated Depreciation—Equipment : 14,000 Loss from Disposal of Plant Asset : 3,000 Equipment 45,000: To record the sale of equipment at a price less than book value. Accumulated depreciation -Truck Step 1: Determine what the current account balance equals. All tools or machines undergo wear and tear over time. Accounting for depreciation to date of disposal When selling or otherwise disposing of a plant asset, a firm must record the depreciation up to the date of sale or disposal. o During the closing process, revenue and expense accounts are cleared by debiting or crediting Income Summary for their amounts. The equipment had an original cost of $50,000 and was 1/2 depreciated when sold. If the depreciation is previously charge less from the original, then the entry should be. True. d. recording entries in a journal. During the closing process, Accumulated Depreciation, Equipment will A. be closed to the income summary account. True. Fees earned 6. The books are closed annually on December 31. 3. b. adding a column of figures. You are to prepare the missing adjusting entry. 20. Balance sheet column 2. The accumulated depreciation account is a statement of financial position account and as the name suggests is cumulative, i.e. Example #2. At the end of the fiscal year, Accounts Receivable has a balance of $100,000 and Allowance for Doubtful Accounts has a balance of $7,000. b. These balances in post-closing T-accounts are transferred over to either the debit or credit column on the post-closing trial balance. Services were performed to satisfy $800 of unearned service revenue. Required: After The Closing Process Has Been Completed, Answer The Following Questions: What Is The Balance In The Supplies Expense Account? $48,800 What is the balance in the Capital account? False. a debit to Insurance Expense and a credit to Prepaid Insurance. b. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance. Powell Company had the following adjusted trial balance: Account Titles Credit Cash Debit $20.390 17.800 Accounts Receivable Supplies 7,690 44,900 Equipment $ 7,100 Accumulated Depreciation Accounts Payable Deferred Rent Revenue 4,000 1,950 36,630 21,900 Capital Stock Retained Earnings Dividends 16,000 Commission Revenue 50,400 5,200 Rent Revenue 6,100 Depreciation Expense … Only nominal accounts are closed. Answer A. False. The asset cost minus accumulated depreciation is known as the book value (or “net book value”) of the asset. A. Depreciation. During the audit of financial statements, auditors should make sure that the audit procedures that they prepare are addressing the risks of material misstatements that cause by depreciation expenses and other related items such as fixed assets. True. The closing entry will credit Supplies Expense, Depreciation Expense–Equipment, Salaries Expense, and Utility Expense, and debit Income Summary. 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