Accounting Chapter 8 - 11

Straight Line Method

(Asset Cost - Residual Value)/ Useful Years of Life = Annual Depreciation

Units of Production

(Asset Cost - Residual Value)/Total Estimated Units = Depreciation Expense Per Unit

Double Declining Balance

2 × 1/Useful Life x Beginning Book Value Every Period= Depreciation Expense

Journal Entries for Depreciation

Debit: Depreciation Expense

Credit: Accumulated Depreciation

Partial Depreciation

Depreciation x (x)/12 months

Amortization (patents, copyrights)

Debit: Amortization Expense

Credit: Accumulated Amortization

Disposal/Sale of an Asset (Loss)

Debit: Cash

Debit: Accumulated Depreciation

Debit: Loss on Sale of Asset

Credit: Asset

Disposal/Sale of an Asset (Gain)

Debit: Cash

Debit: Accumulated Depreciation

Credit: Gain on Sale of Asset

Credit: Asset

Insurance of Note Payable

Debit: Cash

Credit: Note Payable

Accrual of Interest

Debit: Interest Expense

Credit: Interest Payable

Payment of Note Payable and Interest

Debit: Note Payable

Debit: Interest Payable

Credit: Cash

Estimated Warranty

Debit: Warranty Expense

Credit: Warranty Liability

Providing Warranty Services

Debit: Warranty Liability

Credit: Cash or Inventory

Contingent Liabilities

Debit: Contingent Liability Expense

Credit: Contingent Liability Payable

Issuance of Bonds Payable

Debit: Cash

Credit: Bonds Payable

Accrual of Interest for Bond

Debit: Interest Expense

Credit: Interest Payable

Interest Payment for Bond

Debit: Interest Payable

Credit: Cash

Issurance of Common Stock

Debit: Cash

Credit: Common Stock

Credit: Additional Paid in Capital

Cash Dividends

Debit: Retained Earnings

Credit: Dividends

Stock Dividends

Debit: Retained Earnings

Credit: Common Stock Dividend Distributable

Treasury Stock

Debit: Treasury Stock

Credit: Cash