Question

question 12
5 points
if a fixed asset, such as a computer, were purchased on january 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight - line depreciation is
depreciation expense 100
accumulated depreciation 100
depreciation expense 1,200
accumulated depreciation 1,200
accumulated depreciation 1,200
depreciation expense 1,200
accumulated depreciation 100
depreciation expense 100

Explanation:

Step1: Calculate annual depreciation

The formula for straight - line depreciation is $Annual\ Depreciation=\frac{Cost - Salvage\ Value}{Useful\ Life}$.
Here, $Cost = 3750$, $Salvage\ Value=150$, and $Useful\ Life = 3$ years.
So, $Annual\ Depreciation=\frac{3750 - 150}{3}=\frac{3600}{3}=1200$.

Step2: Calculate monthly depreciation

Since there are 12 months in a year, $Monthly\ Depreciation=\frac{Annual\ Depreciation}{12}$.
Substitute $Annual\ Depreciation = 1200$ into the formula, $Monthly\ Depreciation=\frac{1200}{12}=100$.

Step3: Determine the journal entry

When recording depreciation expense, the account "Depreciation Expense" is debited (increased) and "Accumulated Depreciation" is credited (increased). The amount for each is the monthly depreciation of 100.

Answer:

A. Depreciation Expense 100, Accumulated Depreciation 100