VCE Accounting

1. 13.4
JOURNAL ENTRIES FOR
DEPRECIATION

2. © Michael Allison. Author’s permission required for external use.
 Depreciation is usually calculated on the last day of the reporting
period
 Depreciation is an expense – the double-entry rules are the same as
all other expense accounts
13.4 JOURNAL ENTRIES FOR DEPRECIATION
Debit Credit
Expenses  
Depreciation [E]
Debit Credit
Expenses  
Debit Credit
Expenses  

3. © Michael Allison. Author’s permission required for external use.
 As depreciation occurs every period, it accumulates over time
2015 20192016 2017 2018
Depreciation
$2,000
Depreciation
$2,000
Depreciation
$2,000
Depreciation
$2,000
Depreciation
$2,000
Accumulated Depreciation
$2,000
$4,000
$2,000
$6,000
$4,000
$2,000
$8,000
$6,000
$4,000
$2,000
$10,000
$8,000
$6,000
$4,000
$2,000
13.4 JOURNAL ENTRIES FOR DEPRECIATION

4. © Michael Allison. Author’s permission required for external use.
 A new ledger is created to record this Accumulated Depreciation… this
is a negative asset (i.e. It has the opposite rules of Assets)
13.4 JOURNAL ENTRIES FOR DEPRECIATION
Debit Credit
Expenses  
Depreciation [E]
Debit Credit
Expenses  
Debit Credit
Expenses  
Debit Credit
Negative Asset  
Accumulated Depreciation [-A]
Debit Credit
Negative Asset  
Debit Credit
Negative Asset  

5. © Michael Allison. Author’s permission required for external use.
2015 20192016 2017 2018
Depreciation
$2,000
Depreciation
$2,000
Depreciation
$2,000
Depreciation
$2,000
Depreciation
$2,000
13.4 JOURNAL ENTRIES FOR DEPRECIATION
Debit Credit
Negative Asset  
Accumulated Depreciation [-A]
31 Dec 2015 Depreciation – Vehicle 2000
31 Dec 2016 Depreciation – Vehicle 2000
31 Dec 2017 Depreciation – Vehicle 2000
31 Dec 2018 Depreciation – Vehicle 2000
31 Dec 2019 Depreciation – Vehicle 2000
Accumulated Depreciation [-A]
31 Dec 2015 Depreciation – Vehicle 2000
31 Dec 2016 Depreciation – Vehicle 2000
31 Dec 2017 Depreciation – Vehicle 2000
31 Dec 2018 Depreciation – Vehicle 2000
31 Dec 2019 Depreciation – Vehicle 2000
Debit Credit
Negative Asset  
Accumulated Depreciation [-A]
31 Dec 2015 Depreciation – Vehicle 2000
31 Dec 2016 Depreciation – Vehicle 2000
31 Dec 2017 Depreciation – Vehicle 2000
31 Dec 2018 Depreciation – Vehicle 2000
31 Dec 2019 Depreciation – Vehicle 2000
Accumulated Depreciation [-A]
31 Dec 2015 Depreciation – Vehicle 2000
31 Dec 2016 Depreciation – Vehicle 2000
31 Dec 2017 Depreciation – Vehicle 2000
31 Dec 2018 Depreciation – Vehicle 2000
31 Dec 2019 Depreciation – Vehicle 2000
Accumulated Depreciation [-A]
31 Dec 2015 Depreciation – Vehicle 2000
31 Dec 2016 Depreciation – Vehicle 2000
31 Dec 2017 Depreciation – Vehicle 2000
31 Dec 2018 Depreciation – Vehicle 2000
31 Dec 2019 Depreciation – Vehicle 2000
Accumulated Depreciation [-A]
31 Dec 2015 Depreciation – Vehicle 2000
31 Dec 2016 Depreciation – Vehicle 2000
31 Dec 2017 Depreciation – Vehicle 2000
31 Dec 2018 Depreciation – Vehicle 2000
31 Dec 2019 Depreciation – Vehicle 2000
Depreciation [E]
31 Dec 2015 Depreciation – Vehicle 2000
Debit Credit
Expenses  
Depreciation [E]
31 Dec 2015 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000
Debit Credit
Expenses  
Depreciation [E]
31 Dec 2015 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000
Depreciation [E]
31 Dec 2016 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000
Depreciation [E]
31 Dec 2015 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000
Depreciation [E]
31 Dec 2017 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000
Depreciation [E]
31 Dec 2015 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000
Depreciation [E]
31 Dec 2018 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000
Depreciation [E]
31 Dec 2015 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000
Depreciation [E]
31 Dec 2019 Acc. Depreciation – Vehicle 2000 31 Dec 2015 Depreciation – Vehicle 2000

6. © Michael Allison. Author’s permission required for external use.
 Which journal are closing entries performed in?…
Cash receipt Cheque butt
Sales invoice
Purchase
invoice
Cash Receipts
Journal
Cash Payments
Journal
Sales Journal Purchases Journal
Any cash received? Any cash paid?
Credit sale made? Credit purchase of stock made?
Memo General Journal
Any other transaction?
13.4 JOURNAL ENTRIES FOR DEPRECIATION

7. © Michael Allison. Author’s permission required for external use.
13.4 JOURNAL ENTRIES FOR DEPRECIATION
General Journal
Date Account DEBIT CREDIT DEBIT CREDIT
31 Dec
2015
Depreciation – Vehicle [E] 2,000
Accumulated Depreciation – Vehicle [-A] 2,000
Vehicle depreciated for 12-months using straight-
line method (Memo 1)
Depreciation – Vehicle [E]
Accumulated Depreciation – Vehicle [-A]
Debit Credit
Expenses  
Debit Credit
Negative Asset  
General Journal
Date Account DEBIT CREDIT DEBIT CREDIT
31 Dec
2015
Depreciation – Vehicle [E] 2,000
Accumulated Depreciation – Vehicle [-A] 2,000
Vehicle depreciated for 12-months using straight-
line method (Memo 1)
General Journal
Date Account DEBIT CREDIT DEBIT CREDIT
31 Dec
2015
Depreciation – Vehicle [E] 2,000
Accumulated Depreciation – Vehicle [-A] 2,000
Vehicle depreciated for 12-months using straight-
line method (Memo 1)
General Journal
Date Account DEBIT CREDIT DEBIT CREDIT
31 Dec
2015
Depreciation – Vehicle [E] 2,000
Accumulated Depreciation – Vehicle [-A] 2,000
Vehicle depreciated for 12-months using straight-
line method (Memo 1)
Depreciation – Vehicle [E]
31 Dec 15 Accumulated dep’n – Vehicle 2000
Debit Credit
Expenses  
General Journal
Date Account DEBIT CREDIT DEBIT CREDIT
31 Dec
2015
Depreciation – Vehicle [E] 2,000
Accumulated Depreciation – Vehicle [-A] 2,000
Vehicle depreciated for 12-months using straight-
line method (Memo 1)
Accumulated Depreciation – Vehicle [-A]
31 Dec 15 Depreciation – Vehicle 2000
Debit Credit
Negative Asset  
General Journal
Date Account DEBIT CREDIT DEBIT CREDIT
31 Dec
2015
Depreciation – Vehicle [E] 2,000
Accumulated Depreciation – Vehicle [-A] 2,000
Vehicle depreciated for 12-months using straight-
line method (Memo 1)
General Journal
Date Account DEBIT CREDIT DEBIT CREDIT
31 Dec
2015
Depreciation – Vehicle [E] 2,000
Accumulated Depreciation – Vehicle [-A] 2,000
Vehicle depreciated for 12-months using straight-
line method (Memo 1)
Use a separate
depreciation ledger
for each Asset

8. © Michael Allison. Author’s permission required for external use.
13.4 JOURNAL ENTRIES FOR DEPRECIATION
General Journal
Date Account DEBIT CREDIT DEBIT CREDIT
31 Dec
2015
Depreciation – Vehicle [E] 2,000
Accumulated Depreciation – Vehicle [-A] 2,000
Vehicle depreciated for 12-months using straight-
line method (Memo 1)
Narration:
• Type of asset (e.g. “vehicle”)
• Periods depreciated (e.g. 12-months)
• Method of depreciation (e.g.
“straight-line”)
• Memo #

9. © Michael Allison. Author’s permission required for external use.
 Depreciation applied in the real world…
13.4 JOURNAL ENTRIES FOR DEPRECIATION

10. © Michael Allison. Author’s permission required for external use.
TASK
In-class Homework
SQ11 X
Ex13.1 X