Machinery and Equipment
Definition: Production machinery
Scope:ModerateDifficulty:Very Easy
Production machinery
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Purchase equipment | ||
| Buy $75,000 equipment for cash. | ||
| Machinery and EquipmentAsset+ | $75,000 | |
| CashAsset− | $75,000 | |
| Cost includes purchase price, delivery, and installation. | ||
| 2. Record depreciation | ||
| Straight-line: ($75,000 − $5,000) / 10 yr = $7,000. | ||
| Depreciation ExpenseExpense+ | $7,000 | |
| Accumulated Depreciation — EquipmentContra Asset+ | $7,000 | |
| Systematic allocation of cost over useful life. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Machinery and EquipmentMachinery and EquipmentAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$75,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$75,000.00
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$75,000.00
$75,000.00
Depreciation ExpenseDepreciation ExpenseExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$7,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$7,000.00
Accumulated Depreciation — EquipmentAccumulated Depreciation — EquipmentLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$7,000.00
Normal bal. ▶
$7,000.00
DurationLong-Term
External Links
- Fixed asset — Wikipedia