3.

The following summary data for the payroll period ended December 27, 2012, are available for Cayman Coating Co.:

Gross pay		$	94,000
FICA tax withholdings			?
Income tax withholdings			15,070
Group hospitalization insurance			1,890
Employee contributions to pension plan			?
Total deductions			26,112
Net pay			?

Additional information:

	For employees, FICA tax rates for 2012 were 5.65% on the first $110,100 of each employees annual earnings and 1.45% on any earnings in excess of $110,100. However, no employees had accumulated earnings for the year in excess of the $110,100 limit.
	For employers, FICA tax rates for 2012 were 7.65% on the first $110,100 of each employees annual earnings and 1.45% on any earnings in excess of $110,100.
	The federal and state unemployment compensation tax rates are 0.6% and 5.4%, respectively. These rates are levied against the employer for the first $7,000 of each employees annual earnings. Only $15,800 of the gross pay amount for the December 27, 2012, pay period was owed to employees who were still under the annual limit.

Gandolfi Construction Co. purchased a used CAT 336DL earth mover at a cost of $345,000 in January 2013. The company's estimated useful life of this heavy equipment is 10 years, and the estimated salvage value is $77,000.

Required:

a.	Using straight-line depreciation, calculate the depreciation expense to be recognized for 2013, the first year of the equipment's life, and calculate the equipment's net book value at December 31, 2015, after the third year of the equipment's life.

Depreciation expense: $________

Netbook value: $___________

b.	Using declining-balance depreciation at twice the straight-line rate, calculate the depreciation expense for the third year of the equipment's life. Double declining rate: _______% Depreciation expense: $_________