Trial Balance (December 31, 2008)

Automobiles (Dr.) 62,000
Accumulated amortization - Automobilies (Cr.) 15,500
Office furniture (Dr.) 16,000
Accumulated amortization - office furniture (Cr.) 5,600
Note Payable (Cr.) 46,000
Interest expense (Dr.) 2,415

Other date:
1. The automobiles were purchased on January 2, 2007, and have an estimated useful life of four years.
2. The office furniture was purchased on July 2, 2004, and has an estimated useful life of 10 years
3. Interest on the 7% note payable is paid on the first day of each quarter (Jan 1, Apr 1, July 1, and Oct 1)

Instruction: Journalized the annual adjusting entries at Dec 31, 2008

My answer:

1. Amortization Expense (Dr.) 29,780
Accumulated amortization (Cr.) 29,780

2. Amortization Expense (Dr) 8,800
Accumulated amortization (Cr) 8,800

3. Interest Expense (Dr.) 1,073
Interest Payable (Cr.) 1,073

I'm not sure is it correct or not, can someone please advise? Thank you very much.

Your 1 and 2 is wrong.

Annual Depreciation Expense = (Original Cost of the Asset - Salvage Value) / Est. Useful Life

Since, in this problem, there is no salvage value then,

Annual Depreciation Expense = (Original Cost of the Asset) / Est. Useful Life

Your 3 is also wrong. You must only accrue the interest from Oct 1 to Dec 31.