Question

1. Paxton Office Supply Company purchased equipment for $80,000. Depreciation Expense for the month is $1,600. What is the balance of the Equipment account after posting the depreciation entry? (80000 or 1600?

2. On the report form balance sheet, the liabilities and owner's equity are listed to the right of the assets. On the account form, the liabilities and owner's equity are listed under the assets.

(True or False?)

Answer 1

1. The balance of the equipment account after posting the depreciation entry is shown below:-

Journal entry

Depreciation expenses Dr, $1,600

To Accumulated Depreciation - expenses $1,600

(To record depreciation expenses)

Therefore, the equipment amount would remain unchanged i.e. $80,000

2. In the account form, the assets are to be classified on the left hand side while the liabilities and the stockholder equity is classified on the right hand side.
On the other hand, in the report form the assets are listed on the top and the liabilities & stockholder equity would be shown on the bottom side.
Therefore the given statement is false.