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New lithographic equipment

Price: $2.99


New lithographic equipment, acquired at a cost of $787,500 at the beginning of a fiscal
year, has an estimated useful life of five years and an estimated residual value of $67,500.

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 $115,000.

Instructions
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 (a) the straight-line method and (b) the double-declining-balance method. The following columnar headings are suggested for
each schedule:

2. Journalize the entry to record the sale.

3. Journalize the entry to record the sale, assuming that the equipment was sold for
$98,900 instead of $115,000.

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