Questions: On July 1, 2022, Cullumber Company purchased new equipment for 102,400. Its estimated useful life was 7 years with a 12,800 salvage value. On January 1, 2025, the company estimated that the equipment's remaining useful life was 10 years, with a revised salvage value of 6,400. (a). (b) Prepare the journal entry to record depreciation on December 31, 2023. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit

To prepare the journal entry for depreciation on December 31, 2023, we need to calculate the depreciation expense for that year using the information provided.

1. Initial Depreciation Calculation (2022-2024):

   • Cost of Equipment: \$102,400
   • Initial Salvage Value: \$12,800
   • Useful Life: 7 years

   The annual depreciation expense using the straight-line method is calculated as follows:

   \[ \text{Annual Depreciation} = \frac{\text{Cost} - \text{Salvage Value}}{\text{Useful Life}} = \frac{102,400 - 12,800}{7} = 12,800 \]

2. Depreciation for 2022 and 2023:

   • Depreciation for 2022: \$12,800
   • Depreciation for 2023: \$12,800

3. Journal Entry for December 31, 2023:

   • Debit: Depreciation Expense
   • Credit: Accumulated Depreciation

   The journal entry would be:

   | Account Titles and Explanation | Debit | Credit | |-------------------------------|---------|---------| | Depreciation Expense | \$12,800| | | Accumulated Depreciation | | \$12,800|

This entry records the depreciation expense for the year 2023, reflecting the reduction in the equipment's value over that period.