New lithographic equipment, acquired at a cost of $800,000 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual valueof $90,000. 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, thedouble-declining-balance methodwas selected.

In the first week of the fifth year, the equipment was sold for $135,000.

Required:

1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and thebook valueof the equipment at the end of each year by (a) thestraight-line methodand (b) the double declining- balance method.

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

3. On January 1, journalize the entry to record the sale, assuming that the equipment was sold for $88,750 instead of $135,000. Refer to the Chart of Accounts for exact wording of account titles.