Need acctg help?

Question

This is the situation:

Save-Mart is a retail store. one of its acct balances on feb 28,end of fiscal year, before adjustment:

Accumulated depreciation on store equipment. =$11420.

(the store equipment has a value of $70970).

Now, the data for adjustment:

store equipment had a useful life of 7 yrs. (all equipment less than 7 years old)

>how are u going to adjust that? Do you consider the accumulated depreciation with a value of $11420 and just add the value obtained after dividing the value over the useful life, and this would be the new accumulated depreciation? Or do you compute for the accumulated depreciation for one year, that is to say, 10138.57...and ur adjusted entry will look like

Debit:Accumulated Depreciation1281.43

Credit: Depreciation Expense 1281.43

THANKS

Answer 1

You've got it backwards.  Depreciation expense is a debit and accumulated depreciation is a credit.  Don't forget that the accumulated depreciation needs to have a tag on it; it should be accumulated depreciation - store equipment.