13.4 Journal entries for depreciation

VCE Accounting

1. 13.4 Journal entries for depreciation

2. Depreciation is usually calculated on the last day of the reporting period Depreciation is an expense – the double-entry rules are the same as all other expense accounts 13.4 Journal entries for depreciation Debit Credit Expenses   Depreciation [E] Debit Credit Expenses   Debit Credit Expenses  

3. As depreciation occurs every period, it accumulates over time 2015 2019 2016 2017 2018 Depreciation $2,000 Depreciation $2,000 Depreciation $2,000 Depreciation $2,000 Depreciation $2,000 Accumulated Depreciation $2,000 $4,000 $2,000 $6,000 $4,000 $2,000 $8,000 $6,000 $4,000 $2,000 $10,000 $8,000 $6,000 $4,000 $2,000 13.4 Journal entries for depreciation

4. A new ledger is created to record this Accumulated Depreciation … this is a negative asset (i.e. It has the opposite rules of Assets) 13.4 Journal entries for depreciation Debit Credit Expenses   Depreciation [E] Debit Credit Expenses   Debit Credit Expenses   Debit Credit Negative Asset   Accumulated Depreciation [-A] Debit Credit Negative Asset   Debit Credit Negative Asset  

5. 2015 2019 2016 2017 2018 Depreciation $2,000 Depreciation $2,000 Depreciation $2,000 Depreciation $2,000 Depreciation $2,000 13.4 Journal entries for depreciation Debit Credit Negative Asset   Accumulated Depreciation [-A] 31 Dec 2015 Depreciation – Vehicle 2000 31 Dec 2016 Depreciation – Vehicle 2000 31 Dec 2017 Depreciation – Vehicle 2000 31 Dec 2018 Depreciation – Vehicle 2000 31 Dec 2019 Depreciation – Vehicle 2000 Accumulated Depreciation [-A] 31 Dec 2015 Depreciation – Vehicle 2000 31 Dec 2016 Depreciation – Vehicle 2000 31 Dec 2017 Depreciation – Vehicle 2000 31 Dec 2018 Depreciation – Vehicle 2000 31 Dec 2019 Depreciation – Vehicle 2000 Debit Credit Negative Asset   Accumulated Depreciation [-A] 31 Dec 2015 Depreciation – Vehicle 2000 31 Dec 2016 Depreciation – Vehicle 2000 31 Dec 2017 Depreciation – Vehicle 2000 31 Dec 2018 Depreciation – Vehicle 2000 31 Dec 2019 Depreciation – Vehicle 2000 Accumulated Depreciation [-A] 31 Dec 2015 Depreciation – Vehicle 2000 31 Dec 2016 Depreciation – Vehicle 2000 31 Dec 2017 Depreciation – Vehicle 2000 31 Dec 2018 Depreciation – Vehicle 2000 31 Dec 2019 Depreciation – Vehicle 2000 Accumulated Depreciation [-A] 31 Dec 2015 Depreciation – Vehicle 2000 31 Dec 2016 Depreciation – Vehicle 2000 31 Dec 2017 Depreciation – Vehicle 2000 31 Dec 2018 Depreciation – Vehicle 2000 31 Dec 2019 Depreciation – Vehicle 2000 Accumulated Depreciation [-A] 31 Dec 2015 Depreciation – Vehicle 2000 31 Dec 2016 Depreciation – Vehicle 2000 31 Dec 2017 Depreciation – Vehicle 2000 31 Dec 2018 Depreciation – Vehicle 2000 31 Dec 2019 Depreciation – Vehicle 2000 Depreciation [E] 31 Dec 2015 Depreciation – Vehicle 2000 Debit Credit Expenses   Depreciation [E] 31 Dec 2015 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000 Debit Credit Expenses   Depreciation [E] 31 Dec 2015 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000 Depreciation [E] 31 Dec 2016 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000 Depreciation [E] 31 Dec 2015 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000 Depreciation [E] 31 Dec 2017 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000 Depreciation [E] 31 Dec 2015 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000 Depreciation [E] 31 Dec 2018 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000 Depreciation [E] 31 Dec 2015 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000 Depreciation [E] 31 Dec 2019 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000

6. Which journal are closing entries performed in?… Cash receipt Cheque butt Sales invoice Purchase invoice Cash Receipts Journal Cash Payments Journal Sales Journal Purchases Journal Any cash received ? Any cash paid ? Credit sale made? Credit purchase of stock made? Memo General Journal Any other transaction ? 13.4 Journal entries for depreciation

7. 13.4 Journal entries for depreciation General Journal Date Account DEBIT CREDIT DEBIT CREDIT 31 Dec 2015 Depreciation – Vehicle [E] 2,000 Accumulated Depreciation – Vehicle [-A] 2,000 Vehicle depreciated for 12-months using straight-line method (Memo 1) Depreciation – Vehicle [E] Accumulated Depreciation – Vehicle [-A] Debit Credit Expenses   Debit Credit Negative Asset   General Journal Date Account DEBIT CREDIT DEBIT CREDIT 31 Dec 2015 Depreciation – Vehicle [E] 2,000 Accumulated Depreciation – Vehicle [-A] 2,000 Vehicle depreciated for 12-months using straight-line method (Memo 1) General Journal Date Account DEBIT CREDIT DEBIT CREDIT 31 Dec 2015 Depreciation – Vehicle [E] 2,000 Accumulated Depreciation – Vehicle [-A] 2,000 Vehicle depreciated for 12-months using straight-line method (Memo 1) General Journal Date Account DEBIT CREDIT DEBIT CREDIT 31 Dec 2015 Depreciation – Vehicle [E] 2,000 Accumulated Depreciation – Vehicle [-A] 2,000 Vehicle depreciated for 12-months using straight-line method (Memo 1) Depreciation – Vehicle [E] 31 Dec 15 Accumulated dep’n – Vehicle 2000 Debit Credit Expenses   General Journal Date Account DEBIT CREDIT DEBIT CREDIT 31 Dec 2015 Depreciation – Vehicle [E] 2,000 Accumulated Depreciation – Vehicle [-A] 2,000 Vehicle depreciated for 12-months using straight-line method (Memo 1) Accumulated Depreciation – Vehicle [-A] 31 Dec 15 Depreciation – Vehicle 2000 Debit Credit Negative Asset   General Journal Date Account DEBIT CREDIT DEBIT CREDIT 31 Dec 2015 Depreciation – Vehicle [E] 2,000 Accumulated Depreciation – Vehicle [-A] 2,000 Vehicle depreciated for 12-months using straight-line method (Memo 1) General Journal Date Account DEBIT CREDIT DEBIT CREDIT 31 Dec 2015 Depreciation – Vehicle [E] 2,000 Accumulated Depreciation – Vehicle [-A] 2,000 Vehicle depreciated for 12-months using straight-line method (Memo 1) Use a separate depreciation ledger for each Asset

8. 13.4 Journal entries for depreciation General Journal Date Account DEBIT CREDIT DEBIT CREDIT 31 Dec 2015 Depreciation – Vehicle [E] 2,000 Accumulated Depreciation – Vehicle [-A] 2,000 Vehicle depreciated for 12-months using straight-line method (Memo 1) Narration: Type of asset (e.g. “vehicle”) Periods depreciated (e.g. 12-months) Method of depreciation (e.g. “straight-line”) Memo #

9. Depreciation applied in the real world… 13.4 Journal entries for depreciation

10. TASK In-class Homework SQ11 X Ex13.1 X