Exercise 8-11A Events related to the acquisition, use, and disposal of a tangible plant asset: straight-line depreciation LO 8-2, 8-5

City Taxi Service purchased a new auto to use as a taxi on January 1, Year 1, for $20,400. In addition, City paid sales tax and title fees of $630 for the vehicle. The taxi is expected to have a five-year life and a salvage value of $6,500. Required a. Using the straight-line method, compute the depreciation expense for Year 1 and Year 2. b & c. Assume that the taxi was sold on January 1, Year 3, for $17,501. Prepare the general journal entries to record the Year 1 depreciation and sale of the taxi in Year 3.

Complete this question by entering your answers in the tabs below.

• Req A
• Req B and C

Using the straight-line method, compute the depreciation expense for Year 1 and Year 2. (Round your answers to the nearest whole dollar amount.)

	Year 1	Year 2
Depreciation expense

• Record depreciation expense.
• Record entry for sale of taxi and gain on sale.