Rapid Recovery Chemical Company manufactures prescription drugs. On January 1, 2003, the company purchased new equipment for $450,000 in cash. The company will depreciate the equipment over a 3-year period at $150,000 each year. Complete the following table:

Explain the difference between cash flows each year and the amount of depreciation expenserecorded.

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Total for 3 Years 2003 2004 2005 Cash paid for equipment Depreciation expense