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 $16,000. 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, 2,300 hours; year 3, 2,200 hours; year 4, 2,100 hours; and year 5, 1,000 hours. 3. Assume NGS sold the hydrotherapy tub system for $4,800 at the end of year 3. The following amounts were forecast for year 3: Sales Revenues $53,000; Cost of Goods Sold $41,000; Other Operating Expenses $5,300; and Interest Expense $1,100. 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.) > Answer is complete but not entirely correct. NICOLE'S GETAWAY SPA (Forecasted) Income Statement For the Year Ended Year 3 Double- Sales Revenue Cost of Goods Sold Gross Profit Straight- Line Units-of- Production Declining Balance $ 53,000 $ 53,000 $ 53,000 (41,000) (41,000) (41,000) 12,000 12,000 12,000 Operating Expenses: Depreciation Expense (3,000) (3,300) (2,304) Other Operating Expenses (5,300) ✓ 5,300 5,300 Loss (Gain) on Disposal of PPE 2,200 850 1,344 Total Operating Expenses Income from Operations Interest Expense (6,100) 2,850 4,340 1,500 2,550 8,196 × (1,100) (1,100) (1,100) Income before Income Tax Expense 400 1,450 7,096
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 $16,000. 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, 2,300 hours; year 3, 2,200 hours; year 4, 2,100 hours; and year 5, 1,000 hours. 3. Assume NGS sold the hydrotherapy tub system for $4,800 at the end of year 3. The following amounts were forecast for year 3: Sales Revenues $53,000; Cost of Goods Sold $41,000; Other Operating Expenses $5,300; and Interest Expense $1,100. 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.) > Answer is complete but not entirely correct. NICOLE'S GETAWAY SPA (Forecasted) Income Statement For the Year Ended Year 3 Double- Sales Revenue Cost of Goods Sold Gross Profit Straight- Line Units-of- Production Declining Balance $ 53,000 $ 53,000 $ 53,000 (41,000) (41,000) (41,000) 12,000 12,000 12,000 Operating Expenses: Depreciation Expense (3,000) (3,300) (2,304) Other Operating Expenses (5,300) ✓ 5,300 5,300 Loss (Gain) on Disposal of PPE 2,200 850 1,344 Total Operating Expenses Income from Operations Interest Expense (6,100) 2,850 4,340 1,500 2,550 8,196 × (1,100) (1,100) (1,100) Income before Income Tax Expense 400 1,450 7,096
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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 $16,000. 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, 2,300 hours; year 3, 2,200 hours; year 4, 2,100 hours; and year 5, 1,000 hours.
3. Assume NGS sold the hydrotherapy tub system for $4,800 at the end of year 3. The following amounts were forecast for year 3:
Sales Revenues $53,000; Cost of Goods Sold $41,000; Other Operating Expenses $5,300; and Interest Expense $1,100. 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.)
> Answer is complete but not entirely correct.
NICOLE'S GETAWAY SPA
(Forecasted) Income Statement
For the Year Ended Year 3
Double-
Sales Revenue
Cost of Goods Sold
Gross Profit
Straight-
Line
Units-of-
Production
Declining
Balance
$
53,000 $
53,000
$
53,000
(41,000)
(41,000)
(41,000)
12,000
12,000
12,000
Operating Expenses:
Depreciation Expense
(3,000)
(3,300)
(2,304)
Other Operating Expenses
(5,300) ✓
5,300
5,300
Loss (Gain) on Disposal of PPE
2,200
850
1,344
Total Operating Expenses
Income from Operations
Interest Expense
(6,100)
2,850
4,340
1,500
2,550
8,196 ×
(1,100)
(1,100)
(1,100)
Income before Income Tax Expense
400
1,450
7,096](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9fd2cbd8-6a9d-4cfc-a484-5eaa3f1f4629%2F26a4a825-d73c-4b36-948a-cf22a598b139%2Fhd257u4_processed.png&w=3840&q=75)
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 $16,000. 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, 2,300 hours; year 3, 2,200 hours; year 4, 2,100 hours; and year 5, 1,000 hours.
3. Assume NGS sold the hydrotherapy tub system for $4,800 at the end of year 3. The following amounts were forecast for year 3:
Sales Revenues $53,000; Cost of Goods Sold $41,000; Other Operating Expenses $5,300; and Interest Expense $1,100. 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.)
> Answer is complete but not entirely correct.
NICOLE'S GETAWAY SPA
(Forecasted) Income Statement
For the Year Ended Year 3
Double-
Sales Revenue
Cost of Goods Sold
Gross Profit
Straight-
Line
Units-of-
Production
Declining
Balance
$
53,000 $
53,000
$
53,000
(41,000)
(41,000)
(41,000)
12,000
12,000
12,000
Operating Expenses:
Depreciation Expense
(3,000)
(3,300)
(2,304)
Other Operating Expenses
(5,300) ✓
5,300
5,300
Loss (Gain) on Disposal of PPE
2,200
850
1,344
Total Operating Expenses
Income from Operations
Interest Expense
(6,100)
2,850
4,340
1,500
2,550
8,196 ×
(1,100)
(1,100)
(1,100)
Income before Income Tax Expense
400
1,450
7,096
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