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Equipment costing $6,000 has a five-year useful life and is depreciated on a straight-line monthly basis. What is the correct monthly adjusting entry?
ADebit Depreciation Expense $100; credit Accumulated Depreciation $100
BDebit Depreciation Expense $100; credit Equipment $100
CDebit Equipment Expense $100; credit Equipment $100
DDebit Accumulated Depreciation $100; credit Depreciation Expense $100
Answer & Solution
Correct answer: A. Debit Depreciation Expense $100; credit Accumulated Depreciation $100
1. Monthly depreciation $= 6{,}000 \div 60 = 100$.
2. Depreciation Expense is debited $\$100$ to record the expense.
3. The cost principle bars crediting Equipment, so Accumulated Depreciation (a contra asset) is credited instead, ruling out B and C.
4. Therefore A is correct; D reverses the entry.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §2.3.1 "Fixed Assets—Deferred Expense", p.73_
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