Fast Taxi Service purch ased a new auto to use as a taxi on January 1, 2011, for \(\$ 27,000\). In addition, Fast paid sales tax and title fees of \(\$ 500\) for the vehicle. The taxi is expected to have a five-year life and a salvage value of \(\$ 2,500\).

Required

a. Using the straight-line method, compute the depreciation expense for 2011 and 2012.

b. Prepare the general journal entry to record the 2011 depreciation.

c. Assume that the taxi was sold on January 1,2013 , for \(\$ 15,000\). Prepare the journal entry for the sale of the taxi in 2013.