Michael Purchased Two Vehicles for His Business on 1 January

Multiple Choice

Michael purchased two vehicles for his business on 1 January 2014. These vehicles cost $70 000 each and have a useful life of 5 years with an expected residual of $20 000 each. The adjusting entry for depreciation on 31 December 2014, using the straight-line method, is which of the following?

A) DR Accumulated depreciation $10 000; CR Depreciation expense $10 000
B) DR Depreciation expense $10 000; CR Accumulated depreciation $10 000
C) DR Accumulated depreciation $20 000; CR Depreciation expense $20 000
D) DR Depreciation expense $20 000 CR Accumulated depreciation $20 000