Determine the annual depreciation expense for each of the estimated five 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 (a) the straight-line method and (b) the double declining- balance method. Round your answers to the nearest whole dollar.

a. Straight-line method

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

b. Double-declining-balance method

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

2. On January 1, journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4

3. On January 1, journalize the entry to record the sale, assuming that the equipment was sold for $96,962 instead of $141,422. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

DATE

DESCRIPTION

POST. REF.

DEBIT

CREDIT

1

2

3

4

Montes Coffee Company purchased packaging equipment on January 5, 2014, for $98,000. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $6,000. The equipment was used for 8,980 hours during 2014, 6,930 hours in 2015, and 4,090 hours in 2016.

	Required:
1.	Determine the amount of depreciation expense for the years ended December 31, 2014, 2015, and 2016 by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. (Note: For STRAIGHT-LINE ONLY, round each year to the nearest whole dollar and round the last year of depreciation as necessary. For DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.)
2.	What method yields the highest depreciation expense for 2014?
3.	What method yields the most depreciation over the three-year life of the equipment?

Depreciation Expense

1	Year	Straight-Line Method	Units-of-Output Method	Double-Declining-Balance Method
2	2014
3	2015
4	2016
5	Total