On Jan 2, 2018, Sandstone Enterprises purchased equipment for $129,200. The equipment has a useful life of four years or of 13,000 working hours and after the useful life it will have a residual value of $13,500. The machine was used for 1,900 hours in 2018, 2,800 hours in 2019; 3,700 hours in 2020.

Required:

1.Calculate the depreciation expense for 2018 and 2019 under each of the following methods:

i.Straight-line,

ii.Double diminishing-balance, and

iii.Units-of -production

2.Record the journal entry for depreciation expense for the year ended December 31, 2018 under the straight-line method.

Which method results in the lowest profit for the first two years? Why?