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If a fixed asset, such as a computer, were purchased on January 1st for $1,832.00 with an estimated life of 6 years and a salvage or residual value of $123.00, what is the journal entry for monthly expense under straight-line depreciation?

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Answer:

Dr depreciation expense  $ 23.74  

Cr accumulated depreciation              $ 23.74  

Explanation:

The depreciation per month would be first thing to determine:

Yearly depreciation =Cost of asset-residual value/useful life

cost of asset is $1,832.00

residual value which is disposal value at the end of useful life is $123.00

Useful life is 6 years

yearly depreciation charge= ($1,832.00-$123.00)/6=$ 284.83  

Monthly depreciation expense=yearly depreciation charge/12=$284.83/12=$23.74  

The journal entry monthly would be a debit to depreciation expense and a credit to accumulated depreciation

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