McCollum Company, a furniture wholesaler, acquired new equipment at a cost of $150,000 at the beginning of the fiscal year. The equipment has an estimated life of five years and an estimated residual value of $12,000. Ellen McCollum, the president, has requested information regarding alternative depreciation methods.

Instructions

1. Determine the annual depreciation for each of the five years of estimated useful life of the equipment, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining-balance method.
2. Assume that the equipment was depreciated under the double-declining-balance method.
In the first week of the fifth year, the equipment was sold for $10,000. Journalize the entry to record the sale.