JournaldrillStraight-line depreciation
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
On April 1, Riverbend Catering bought kitchen equipment for $38,000. It expects a salvage value of $2,000 and a useful life of 6 years, and uses the straight-line method. Record depreciation for the year ended December 31 (9 months of use).
What this exercise teaches
Annual depreciation is ($38,000 - $2,000) / 6 = $6,000, and 9 months is $6,000 x 9/12 = $4,500. Depreciation Expense is debited and Accumulated Depreciation, Equipment is credited, so the Equipment account keeps showing the original cost.
A hint if you get stuck
Spread the depreciable cost evenly over the life, take only the months used this year, and credit the contra asset.
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