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24 November, 13:18

On January 1, 2017, Salt Creek Country Club purchased a new riding mower for $15,200. The mower is expected to have a 10-year life with a $2,900 salvage value. What journal entry would Salt Creek make on December 31, 2017, if it uses straight-line depreciation?

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  1. 24 November, 13:21
    0
    Depreciation (debit) $1,230

    Accumulated Depreciation - Riding Mower (credit) $1,230

    Explanation:

    Straight Line Method of Depreciation, charges the same amount of depreciation over the useful life of the asset.

    Depreciation Charge = (Cost - Residual Value) / Useful Life

    2017

    Depreciation Charge = ($15,200 - $2,900) / 10-years

    = $1,230

    Recognize the depreciation expense to Profit and Loss and Accumulate the Depreciation Charge in Financial Statement through Accumulate Depreciation Account.

    Depreciation (debit) $1,230

    Accumulated Depreciation - Riding Mower (credit) $1,230
  2. 24 November, 13:24
    0
    Debit depreciation expenses with $1,230, and credit accumulated depreciation also with $1,230.

    Explanation:

    Annual depreciation expenses = ($15,200 - $2,900) : 10 = $12,300 : 10 = $1,230

    The journal entries that Salt Creek would make on December 31, 2017 are as follows:

    Details Dr ($) Cr ($)

    Depreciation expenses 1,230

    Accumulated depreciation 1,230

    Being riding mower depreciation for the year
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