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Champion Company purchased and installed carpet in its new general offices on March 31 for a total cost of $18,000. The carpet is estimated to have a 15-year useful life and no residual value.

Required:
a. Prepare the journal entries necessary for recording the purchase of the new carpet.
b. Record the December 31 adjusting entry for the partial-year depreciation expense for the carpet assuming that Champion Company uses the straight-line method.

Respuesta :

Answer and Explanation:

The journal entries are shown below:

a. Carpet    $18,000

         To Cash   $18,000

(Being the cash paid is recorded)

b. Deprecation   $900

         To Accumulated Depreciation   $900

(Being Depreciation expense recorded)

The computation is shown below:

= $18,000 ÷ 5 years × 9 months ÷ 12 months

= $900

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