2. A new machine is expected to produce 600,000 units of product during its 8-year useful life. The machine cost $1,800,000 cash and it is estimated to have a $60,000 salvage value. (10 Points)
1. Calculate the depreciation if the machine produces 70,000 units of product during its first year, using the units-of-production method.
2. Calculate the depreciation on the machine using the double-declining-balance method.
3. Calculate the depreciation on the machine using the straight-line method.
3. A company sold for $40,000 cash a machine that originally cost $90,000. The accumulated depreciation on this machine was $47,000 at the time of the sale. What was the company’s gain or loss on this sale? (5 Points)
4. On November 1, Bob’s Skateboards signed a $12,000, 90-day, 5% note payable to cover a past due account payable. (5 Points)
a. What amount of interest expense on this note should Bob’s Skateboards report on year-end December 31?
b. Prepare Bob’s journal entry to record the issuance of the note payable.
c. Prepare Bob’s journal entry to record the payment of the note on February 1 of the following year.
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