ADJUSTING ENTRIES company\'s outstanding debt ( excluding the constsruction loan

Question

ADJUSTING ENTRIES company's outstanding debt ( excluding the constsruction loan) is at 8%. The Building is still under construction at the end of the year. Company capitalizes interest to the related Work-In-Process account. Beginning PP&E; contains $635,000 in equipment purchased at the beginning of 2014 and $1,000,000 in land. The equipment is expected to last until the end of 2018 and will have $10,000 salvage value. The machine purchased 2/31/2018| atthe en 16 12/31/2018is expected to last until March 2021 and will have $5,000 salvage value. Company uses the Straight Line Method for depreciation Company's employees earn $3,000 during December. Company pays its employees for hours earned at the beginning of the following month. Company estimates that 2% of the Accounts Receivable on the books at the end of the year will not be collectible. company's tax rate is 30% for the year 17 1 18 12/31/2018 |12/31/2018 19 CLOSING ENTRIES 20 12/31/2018 Prepare the closing entries for the company

Explanation / Answer

Closing entries for the year ended on 12/31/2018 are

1)Depreciation on equipments :

         Depreciation on equipments A/c Dr            125000

              To Depreciation fund/Equipments A/c          125000

   2) Depreciation on Machine:

          Depreciation on Machine A/c Dr            32770

              To Depreciation fund/Machine A/c          32770

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