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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 $10,000. 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, 2,400 hours; year 2, 2,500 hours; year 3, 2,000 hours; year 4, 2,100 hours; and year 5, 1,000 hours. . Assume NGS sold the hydrotherapy tub system for $3,000 at the end of year 3.The following amounts were forecast for year 3: Sales Revenues $47,000; Cost of Goods Sold $37,000; Other Operating Expenses $4,700; and Interest Expense $900. 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.)

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 $10,000. 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, 2,400 hours; year 2, 2,500 hours; year 3, 2,000 hours; year 4, 2,100 hours; and year 5, 1,000 hours. . Assume NGS sold the hydrotherapy tub system for $3,000 at the end of year 3.The following amounts were forecast for year 3: Sales Revenues $47,000; Cost of Goods Sold $37,000; Other Operating Expenses $4,700; and Interest Expense $900. 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.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Required information [The following information applies to the questions displayed below.] 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 $10,000. 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, 2,400 hours; year 2, 2,500 hours; year 3, 2,000 hours; year 4, 2,100 hours; and year 5, 1,000 hours. 3. Assume NGS sold the hydrotherapy tub system for $3,000 at the end of year 3.The following amounts were forecast for year 3: Sales Revenues $47,000; Cost of Goods Sold $37,000; Other Operating Expenses $4,700; and Interest Expense $900. 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.)
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] 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 $10,000. 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, 2,400 hours; year 2, 2,500 hours; year 3, 2,000 hours; year 4, 2,100 hours; and year 5, 1,000 hours. 3. Assume NGS sold the hydrotherapy tub system for $3,000 at the end of year 3.The following amounts were forecast for year 3: Sales Revenues $47,000; Cost of Goods Sold $37,000; Other Operating Expenses $4,700; and Interest Expense $900. 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.)
Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses: Other Operating Expenses Depreciation Expense Total Operating Expenses Income from Operations Interest Expense NICOLE'S GETAWAY SPA (Forecasted) Income Statement For the Year Ended Year 3 Income before Income Tax Expense $ Straight- Line 47,000 37,000 10,000 4,700 1,800 6,500 3,500 X 900 2,600 Units-of- Production 47,000 37,000 10,000 4,700 1,800 6,500 3,500 X 900 2,600 Double- Declining Balance $ 47,000 37,000 10,000 4,700 1,440 6,140 3,860 X 900 2,960
Transcribed Image Text:Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses: Other Operating Expenses Depreciation Expense Total Operating Expenses Income from Operations Interest Expense NICOLE'S GETAWAY SPA (Forecasted) Income Statement For the Year Ended Year 3 Income before Income Tax Expense $ Straight- Line 47,000 37,000 10,000 4,700 1,800 6,500 3,500 X 900 2,600 Units-of- Production 47,000 37,000 10,000 4,700 1,800 6,500 3,500 X 900 2,600 Double- Declining Balance $ 47,000 37,000 10,000 4,700 1,440 6,140 3,860 X 900 2,960
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