Chapter 3 Homework
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Exercise 3-5 Preparing adjusting entries (annual)-depreciation LO4
10
points
Mean Beans, a local coffee shop, has the following assets on January 1, 2023. Mean Beans prepares annual financial statements and
has a December 31, 2023 year-end. The company's depreciation policy is to use the straight-line method to depreciate its assets.
a. On January 1, 2023, purchase equipment costing $23,900 with an estimated life of five years. Mean Beans will scrap the equipment
after five years for $0
b. On July 1, 2023, purchase furniture (tables and chains) costing $17,000 with an estimated life of ten years. Mean Beans estimates
that it can sell the furniture for $1,500 after ten years
c. On January 1, 2021, Mean Beans had purchased a car costing $44,750 with an estimated life of eight years. Mean Beans estimates
that it can sell the car for $8,950 after eight years.
Required:
1-a. For each transaction, calculate the current year's annual depreciation expense.
Annual depreciation expense on equipment
Annual depreciation expense on furniture
Annual depreciation expense on car
1-b. For each transaction, record the adjusting entry on December 31, 2023
View transaction list
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