New lithographic equipment, acquired at a cost of $875,000 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $75,300. 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, the equipment was sold for $128,100.

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 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.

Cash __________ _______________

Accumulated Depreciation __________ _______________

Equipment __________ _______________

Gain On sale of equipment __________ _______________

3. Journalize the entry to record the sale, assuming that the equipment was sold for $110,000 instead of $128,100. If an amount box does not require an entry, leave it blank.

Cash __________ _______________

Accumulated Depreciation __________ _______________

loss On sale of equipment __________ _______________

Equipment __________ _______________