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BE4-5 At the end of its first year, the trial balance of Rayburn Company shows Equipment $22,000 and zero balances in Accumulated Depreciation—Equipment and Depreciation Expense. Depreciation for the year is estimated to be $2,750. Prepare the annual adjusting entry for depreciation at December 31, post the adjustments to T-accounts, and indicate the balance sheet presentation of the equipment at December 31.

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Answer:

Please see the answer below:

Explanation:

  • Dated: December 31

Debit: Depreciation Expense         $2,750

Credit: Accumulated Depreciation           $2,750

To record adjusting entry for Depreciation Expense of Equipment.

  • For T-accounts the entries will made as above, Depreciation T-Account will be Debited with $2750 and Accumulated Depreciation T-Account will be credited with $2750.

  • Rayburn Company

Balance Sheet as of December 31

Fixed Assets:                                                 $               $  

Equipment                                                  22,000              

Less: Accumulated Depreciation               (2,750)          

Net Cost of Equipment as of Dec 31                           19,250

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