At the beginning of the year, Foster & Long Company bought machinery, shelving, and a forklift. The machinery initially cost $31,600 but had to be overhauled (at a cost of $2,400) before it could be installed (at a cost of $1,200) and finally put into use. The machinerys total life was estimated as 40,000 hours, with an estimated residual value of $1,000. The machinery was actually used 5,000 hours in year 1 and 7,000 hours in year 2. Repair costs were $500 in each year.

The shelving cost $10,050 and was expected to last 5 years, with a residual value of $750. The forklift cost $17,550 and was expected to last six years, with a residual value of $2,300.

A. Compute year 2 straight-line depreciation expense for the shelving and give the journal entry to record it.

B. Compute double-declining-balance depreciation expense for years 1 and 2 for the forklift. TIP: Remember that the formula for double-declining balance uses cost minus accumulated depreciation (not residual value).

C. Prepare the journal entry to record double-declining balance depreciation expense for the forklift for year 2.