XYZ Company purchased an equipment on July 1, 2015 for $42,000. The equipment has an estimated useful life of five years and Barton expects to sell the equipment at the end of its life for $2,000.

Required:

1. Calculate the annual depreciation for the Equipment.
2. Prepare the adjusting entry at Dec 31, 2015
3. Show the effect of the adjusting entry on
   1. The Income statement for year ended 2017

The Balance sheet on Dec 31, 2017