On January 2, 2018 Smith Electronics purchased a machine to help automate operations. The Company that manufactured the machine had a standard price for this item at $25,000, but Smith was able to negotiate a 20% discount from standard price. However, as a result of the lower price Smith paid $1,200 of freight costs, hired an installation team for $1,300 to install the new machine. In addition, Smith had to rent a crane for $800 as part of the installation. The city required Smith to pay a one-time inspection fee of $700. Last, Smith incurred $1,000 training employees to use the new equipment. The equipment has a five year useful life with no salvage value.

1. For 2018 compute depreciation expense for straight-line and double declining balance.

2. Assume the equipment performs poorly and you decide to sell it after 9 months. You are able to sell the equipment for $14,000 cash. You used double declining balance depreciation method.

* Record the sale