Question

Hane Company purchased a machine for $50,000 on May 1 of Year 1. Also associated with this purchase on May 1 of Year 1 were $3,800 in sales taxes and $4,000 in machine preparation, shipping, and installation costs. Hane paid a total of $10,000 cash and signed a note payable agreeing to pay the remainder in the future. The machine has an estimated useful life of 6 years and an estimated salvage value of $5,000. Hane Company uses the straight-line method for computing depreciation expense.
 
Which ONE of the following is included in the journal entry necessary to record depreciation expense on the machine for Year 2?
                
CREDIT to Depreciation Expense for $8,800
                
CREDIT to Accumulated Depreciation for $14,667
                
CREDIT to Cash for $7,500
                
CREDIT to Accumulated Depreciation for $8,800
                
CREDIT to Accumulated Depreciation for $12,500
                
CREDIT to Depreciation Expense for $7,500
                
CREDIT to Cash for $8,800
                
CREDIT to Accumulated Depreciation for $7,500

Answer 1