On January 1, 2017, Salt Creek Country Club purchased a new riding mower for $15,200. The mower is expected to have a 10-year life with a $2,900 salvage value. What journal entry would Salt Creek make on December 31, 2017, if it uses straight-line depreciation?

Depreciation (debit) $1,230

Accumulated Depreciation - Riding Mower (credit) $1,230

Explanation:

Straight Line Method of Depreciation, charges the same amount of depreciation over the useful life of the asset.

Depreciation Charge = (Cost - Residual Value)/ Useful Life

2017

Depreciation Charge = ($15,200 - $2,900)/ 10-years

                                   = $1,230

Recognize the depreciation expense to Profit and Loss and Accumulate the Depreciation Charge in Financial Statement through Accumulate Depreciation Account.

Depreciation (debit) $1,230

Accumulated Depreciation - Riding Mower (credit) $1,230

Debit depreciation expenses with $1,230, and credit accumulated depreciation also with $1,230.

Explanation:

Annual depreciation expenses = ($15,200 - $2,900) ÷ 10 = $12,300 ÷ 10 = $1,230

The journal entries that Salt Creek would make on December 31, 2017 are as follows:

Details                                      Dr ($)                  Cr ($)

Depreciation expenses          1,230

Accumulated depreciation                                1,230

Being riding mower depreciation for the year                

d. all of the above are true.

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