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On October 1, Plattsburgh Warehouse paid cash of $16,320 for computers that are expected to remain useful for four years. At the end of 4 years, the value of the computers is expected to be zero.

A. Calculate the amount of depreciation for the month of October using the straight-line depreciation method.

Yearly Depreciation = (Cost - Residual Value)/(Time)

Yearly Depreciation = / = per year

One-Months Depreciation = (Yearly Depreciation)/(12) 

One-Months Depreciation = /12 = per month.

B. Record the adjusting entry for depreciation on October 31.

Journal
DateDescriptionDebitCredit
October 31
October 31

C. Post the purchase of October 1 and the depreciation on October 1 to T accounts for the following accounts:

Computer Equipment, Accumulated Depreciation—Computer Equipment, and Depreciation Expense—Computer Equipment.

Show their balances at October 31.

Computer Equipment
DebitCredit
Double lineDouble line

Accumulated Depreciation--Computer Equipment
DebitCredit
Double lineDouble line

Depreciation Expense--Computer Equipment
DebitCredit
Double lineDouble line

D. What is the computer equipment’s book value on October 31?

Cost LESS Accumulated Depreciation

- =