Explain how accrual accounting differs from cash-basis accounting; adjust the accounts for depreciation
Response to the following problem:
Suppose that on January 1 Brothers Golf Company paid cash of $35,000 for equipment that is expected to remain useful for five years. At the end of five years, the equipment's value is expected to be zero.
1. Make journal entries to record
(a) purchase of the equipment on January 1 and
(b) annual depreciation on December 31.
Include dates and explanations, and use the following accounts: Equipment; Accumulated Depreciation-Equipment; and Depreciation Expense-Equipment.
2. Post to the accounts and show their balances at December 31.
3. What is the equipment's book value at December 31?