1. Office equipment was acquired on February 1, 2015 that cost P 120,000.

0. It is estimated that it will last for five years with a

salvage value of P 20,000 at the end of its life.

Depreciation expense = Cost – Salvage value / useful life

Depreciation expense = 120,000 – 20,000 / 5 years = 20,000 depreciation expense annually / yearly
= 20,000/12 = 1,667 = monthly depreciation expense

Depreciation expense for 2015 = 18,337 = (1,667 monthly depreciation x 11 months from Feb 1 to December 31, 2015)

Journal entry on Feb 1, 2015 Adjusting entry on December 31, 2015

Office equipment 120,000 Depreciation expense 18,337

Cash 120,000 Accumulated Depreciation 18,337

Year -2016 Adjusting entry on December 31, 2016

No entry Depreciation expense 20,000

Accumulated depreciation 20,000

Office equipment 120,000 cost

Less: Accumulated Depreciation ( 18,337)
Net Book Value – Dec,31, 2015 101,663

Depreciation expense Accumulated depreciation Net Book Value

Year 1- 2015 18,337 18,337 101,663
Year 2- 2016 20,000 38,337 81,663
Year 3- 2017 20,000 58,337 61,663
Year 4- 2018 20,000 78,337 41,663
Year 5 -2019 20,000 98,337 21,663
Year 6 – 2020 – Jan 31 1,663 100,000 20,000

1. Prepare adjusting entry at the end of December 31, 2015 – presented above
2. Prepare adjusting entry at the end of December 31, 2016 – presented above
3. How much is the total accumulated depreciation for 2015? =18,337
4. How much is the total accumulated depreciation for 2016? = 38337
5. How much is the total accumulated depreciation for 2017? = 58,337
6. How much is the net book value for 2015? = 101,663
7. How much is the net book value for 2016? = 81,663
8. How much is the net book value for 2017? = 61,663

For your exercises – Answer the following Problems. Write your answer on a one whole sheet of paper and send to me
via messenger not later than 4 pm today.

2. Acquired office furniture on April 1, 2015 that cost, P 150,000 and has a useful life of 5 years and a salvage value at the
end of its life of P 20,000.

Depreciation expense = 150,000- 20,000 / 5 = 26,000/12 months = 2,167 monthly depreciation expense x 9mos = 19,503
Journal entry: adjusting entry – December 31, 2015
Office equipment 150,000 Depreciation expense 19,503
Cash 150,000 Accumulated depreciation 19,503

Year 2016

No entry Depreciation expense 26,000

Accumulated depreciation 26,000

1. Prepare adjusting entry at the end of December 31, 2015 .

2. Prepare adjusting entry at the end of December 31, 2016 .
3. How much is the total accumulated depreciation for 2015? 19,503
4. How much is the total accumulated depreciation for 2016? 45,503
5. How much is the total accumulated depreciation for 2017? 71,503
6. How much is the net book value for 2015? 130,497
7. How much is the net book value for 2016? 104,497
8. How much is the net book value for 2017? 78,497
3. Acquired office furniture on June 1, 2015 that cost, P 240,000 and has a useful life of 5 years with no salvage value at the
end of its life.

Depreciation expense = 240,000 / 5 years = 48,000 annual dep / 12 months = 4,000 monthly depreciation expense x 7
months = 28,000 depreciation expense for 2015

Journal entry: adjusting entry – December 31, 2015

Office equipment 240,000 Depreciation expense 28,000
Cash 240,000 Accumulated depreciation 28,000

Year 2016

No entry Depreciation expense 48,000

Accumulated depreciation 48,000

1. Prepare adjusting entry at the end of December 31, 2015 . presented above
2. Prepare adjusting entry at the end of December 31, 2016 . presented above
3. How much is the total accumulated depreciation for 2015? 28,000
4. How much is the total accumulated depreciation for 2016? 76,000
5. How much is the total accumulated depreciation for 2017? 124,000
6. How much is the net book value for 2015? 212,000
7. How much is the net book value for 2016? 164,000
8. How much is the net book value for 2017?116,000
9. How much is the net book value for 2020? 0