A Copy Machine Acquired on May 1 with a Cost

question 213

Essay

A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of three years. Assuming that it will have a residual value of $445, determine the depreciation for the first and second year by the straight-line method. Round your answers to the nearest whole dollar.

Understand the basic concepts of journal entries, including compound entries and the debit and credit system.

Define and differentiate between calendar year, accounting period, and fiscal year.

Recognize the proper use and significance of the posting reference column in the ledger.

Prepare and record transactions in journal entries.

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Definitions:

Beginning Inventory

The value of all the goods held by a company at the start of an accounting period, before any purchases or sales are made.

Lower Of Cost

Refers to a valuation principle that directs inventory and other assets to be recorded at the lower of either the original cost or the current market value.

Net Realizable Value

The estimated selling price of inventory in the ordinary course of business minus any estimated costs necessary to make the sale, used in determining the value of ending inventory.