Caribe Company purchase painting equipment on July 1, 2005 for 232,800. The equipment was expected to have a useful life of six years with a residual value of $12,960. Caribe Company closes their financial year on December 31 st.
Determine the amount of depreciation expense for each year using the straight line method. Journalize the depreciation expense entry used by Caribe Company for the end of fiscal year 2005 and 2006.