A business acquired equipment for $150,000 on January 1, 2015. The equipment will be depreciated over five years of its 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 2015? (Assume the salvage value of the acquired equipment to be zero.)
A. Debit $150,000 to Equipment and credit $150,000 to Cash.
B. Debit $150,000 to Depreciation Expense and credit $150,000 to Accumulated Depreciation.
C. Debit $30,000 to Depreciation Expense and credit $30,000 to Accumulated Depreciation.
Debit $30,000 to Depreciation Expense and credit $30,000 to Equipment.
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On September 1, 2014, Joy Company paid $8,000 in advance for an 8-month rental space covering the period of September, 2014 through April, 2015. The prepaid expense was initially recorded as an asset. Joy makes adjusting entries once a year at year-end. The adjusting entry on December 31, 2014 would include a:
A. debit of $8,000 to Cash.
B. credit of $8,000 to Prepaid Rent.
C. debit of $4,000 to Rent Expense.
D. credit of $4,000 to Rent Expense.
ABC Company signed a one-year $12,000 note payable at 8% interest on May 1, 2012. How much interest expense must be accrued on May 31, 2012?
A. $960
B. $320
C. $80
D. $40
ABC Company signed a one-year $48,000 note payable at 8% interest on May 1, 2014. If ABC only adjusts their accounts once a year at year-end, how much interest expense was accrued on December 31, 2014?
A. $1,280
B. $3,840
C. $2,560
D. $3,200
Accumulated Depreciation is a ________ account and carries a ________ normal balance.
A. revenue; debit
B. expense; debit
C. contra asset; credit
D. liability; credit