Question

Nicole’s Getaway Spa (NGS) purchased a hydrotherapy tub system to add to the wellness programs at NGS. The machine was purchased at the beginning of the year at a cost of $25,000. The estimated useful life was five years and the residual value was $1,000. Assume that the estimated productive life of the machine is 10,000 hours. Expected annual production was year 1, 2,550 hours; year 2, 2,300 hours; year 3, 2,050 hours; year 4, 2,100 hours; and year 5, 1,000 hours. Assume NGS sold the hydrotherapy tub system for $7,500 at the end of year 3.The following amounts were forecast for year 3: Sales Revenues $62,000; Cost of Goods Sold $48,000; Other Operating Expenses $4,800; and Interest Expense $1,000. Create an income statement for year 3 for each of the different depreciation methods, ending at Income before Income Tax Expense. (Don't forget to include a loss or gain on disposal for each method.). (Do not round intermediate calculations. Round your answers to the nearest dollar amount.Forcasted income statement.

Answer 1