(Detailed Explanation Please)

Jing Company was started on January 1, Year 1 when it issued common stock for $40,000 cash. Also, on January 1, Year 1 the company purchased office equipment that cost $18,000 cash. The equipment was delivered under terms FOB shipping point, and transportation cost was $2,500. The equipment had a five-year useful life and a $6,500 expected salvage value.

Using double-declining-balance depreciation, what the amount of depreciation expense and the amount of accumulated depreciation, respectively, that would appear on the December 31, Year 3 financial statements?

Multiple Choice

• $0 and $17,500.

• $6,480 and $17,280.

• $880 and $14,000.

• $3,888 and $21,388.