Beaver Construction purchases new equipment for $50,400 cash on April 1, 2015. At the time of purchase, the equipment is expected to be used in operations for seven years (84 months) and have no resale or scrap value at the end. Beaver depreciates equipment evenly over the 84 months ($600/month).

Record the necessary entries in the Journal Entry Worksheet

1-Beaver Construction purchases new equipment for $50,400 cash on April 1, 2015. Record the purchase of equipment.

2- Beaver Construction purchases new equipment for $50,400 cash on April 1, 2015. At the time of purchase, the equipment is expected to be used in operations for seven years (84 months) and have no resale or scrap value at the end. Beaver depreciates equipment evenly over the 84 months ($600/month). Record the adjusting entry.

1) Journal Entry 1: a debit entry for Equipment and a credit entry for cash with $50,400

2) Journal Entry 2: debit depreciation and credit accumulated depreciation with $5,400

Explanation:

The question says to record the necessary entries in the Journal Entry Worksheet

There are two entries:

1. The purchase of the new equipment for $50,400 on April 1, 2015 and the consideration was paid in cash. The implication is a debit entry for Equipment and a credit entry for cash with $50,400

2. The second entry is to determine the depreciation for the year 2015 since it is a non-current asset. Depreciation represents an expense. Since it was purchased April 1; 3 months are gone in the year.

Therefore, the depreciation for 2015 = April - December = 9 months x $600 per month = $5,400

Hence, debit depreciation and credit accumulated depreciation with $5,400

Date                               Particulars                           Debit  ($)         Credit ($)

April 1, 2015             Equipment                                 50,400

                                  Cash                                                                 $50,400

Being the record of the purchase of equipment

December 31, 2015    Depreciation                                  5,400

                                 Accumulated Depreciation                                $5,400

Being the record of depreciation amount for the year

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