Stallings, Inc. purchased manufacturing equipment for $8,400. It has an estimated useful life of seven years and no residual value. The company should record depreciation expense of $50 per month. (Assume that the company uses the straight-line method.)

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Using the straight-line method, the annual depreciation expense is calculated as the cost of the asset minus its residual value, divided by its useful life. Given the cost of $8,400, a useful life of 7 years, and no residual value, the annual depreciation would be $8,400 / 7 = $1,200 per year, or $100 per month ($1,200 / 12 months).