Depreciation by two methods; sale of fixed asset

New tire retreading equipment, acquired at a cost of $812,500 on September 1 at the beginning of a fiscal year, has an estimated useful life of 5 years and an estimated residual value of $69,900. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected.

In the first week of the fifth year, on September 6, the equipment was sold for $119,000.

Required:

1. Determine the annual depreciation expense for each of the estimated 5 years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods:

a. Straight-line method

Year	Depreciation Expense	Accumulated Depreciation, End of Year	Book Value, End of Year
1	$	$	$
2	$	$	$
3	$	$	$
4	$	$	$
5	$	$	$

b. Double-declining-balance method

Year	Depreciation Expense	Accumulated Depreciation, End of Year	Book Value, End of Year
1	$	$	$
2	$	$	$
3	$	$	$
4	$	$	$
5	$	$	$

2. Journalize the entry to record the sale, assuming double-declining-balance method is used. If an amount box does not require an entry, leave it blank.

	Account	Debit	Credit
	CashDepreciation Expense-EquipmentEquipmentGain on Sale of EquipmentLoss on Sale of Equipment
	Accumulated Depreciation-EquipmentDepreciation Expense-EquipmentEquipmentGain on Sale of EquipmentLoss on Sale of Equipment
	Accumulated Depreciation-EquipmentCashDepreciation Expense-EquipmentEquipmentLoss on Sale of Equipment
	Accumulated Depreciation-EquipmentBuildingsDepreciation Expense-EquipmentGain on Sale of EquipmentLoss on Sale of Equipment

3. Journalize the entry to record the sale, assuming that the equipment was sold for $102,100 instead of $119,000. If an amount box does not require an entry, leave it blank.

	Account	Debit	Credit
	Accounts PayableCashDepreciation Expense-EquipmentEquipmentGain on Sale of Equipment
	Accounts ReceivableAccumulated Depreciation-EquipmentDepreciation Expense-EquipmentEquipmentGain on Sale of Equipment
	Gain on Sale of EquipmentAccounts PayableDepreciation Expense-EquipmentEquipmentLoss on Sale of Equipment
	Accumulated Depreciation-EquipmentCashDepreciation Expense-EquipmentEquipmentGain on Sale of Equipment