A Business Purchased Equipment for $120,000 on January 1,2017

question 79

Multiple Choice

A business purchased equipment for $120,000 on January 1,2017.The equipment will be depreciated over the five years of its estimated useful life using the straight-line depreciation method.The business records depreciation once a year on December 31.Which of the following is the adjusting entry required to record depreciation on equipment for the year 2017? (Assume the residual value of the acquired equipment to be zero. )

• A)Debit $120,000 to Equipment,and credit $120,000 to Cash.
• B)Debit $24,000 to Depreciation Expense-Equipment,and credit $120,000 to Accumulated Depreciation-Equipment.
• C)Debit $24,000 to Depreciation Expense-Equipment,and credit $24,000 to Accumulated Depreciation-Equipment.
• D)Debit $24,000 to Depreciation Expense,and credit $24,000 to Equipment.

---

Definitions:

Price-Support Payments

Government subsidies provided to farmers or producers to maintain the market price of an agricultural product above its competitive equilibrium level.

Family Farm

A farm owned and operated by a family, typically passed down through generations, as opposed to corporate farms owned by companies.

Great Depression

A severe worldwide economic downturn that lasted from 1929 until the early 1940s, marked by massive unemployment and deflation.

1933

A pivotal year during the Great Depression characterized by significant banking crises and the implementation of New Deal policies by President Franklin D. Roosevelt in the United States.