the equipment had an estimated useful life of five years. Compute the book value

Question

the equipment had an estimated useful life of five years. Compute the book value of the equipment at March 31st, after the proper March adjustment is recorded

Help Save&Exit; Required information LThe following information applies to the questions displayed below Hoffman, Inc. adjusts its books each month but closes its books at the end of the year. The trial balance at March 31 before adjustments is as follows Cash Accounts Receivable Supplies Prepaid Insurance Équipment Accumulated Depreciation: Equipment Unearned Service Revenue Capital Stock Retained Earnings Dividends Service Revenue Earned Salaries Expense utilities Expense Rent Expense $11,030 9,738 1,418 3,080 32,409 12,960 7,e50 5,75e 23,950 1,670 28,318 8,35e 580 s 7e,820 70,eze On March 1, Hoffman paid in advance for four months insurance. The necessary adjusting entry at March 31 includes which of the followeng? Next >

Explanation / Answer

1. The necessary adjusting entry for prepaid expenses:

Insurance expenses incurred on 1st March which is of 4 months i.e. March, April, May, June. On 31st March expenses related to March month should be transferred from Prepaid Insurance to Insurance expenses. The entry would be:

Insurance expenses A/c Dr.                 770                         (3080/4x1)

                 To Prepaid Insurance A/c                    770

( For Insurance expenses recorded for March month.)

2. Computation of book value of equipment:

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