10 31) On July 1, 2020, Suntera Corp. purchased and placed in service a machine with a cost of $460,000. Suntera estimated the service life to be 5 years or 30,000 units of output, with an estimated residual value of $6,000. During 2020, 2,600 units were produced. (a) The straight-line method of depreciation (b) The units-of-production method of depreciation* Your answer 71 32) Buy Best Company sells personal computers for $2,300 each. The price includes a two-year warranty. During 2015, the company sells 600 computers. On the basis of past experience, the warranty costs are estimated to be $150 per computer. The actual warranty costs paid by Buy Best during 2015 were $45,000. Prepare general journal entries to record the estimated warranty expense and the warranty payments during 2015. 33) Parker, Smith, and James form a partnership. Parker contributes $60,000 cash and Smith contributes $20,000 in cash. James contributes equipment with a fair value of $25,000. Prepare the journal entry to record the formation of the partnership. Your answer 34) On June 18, 2020, Woods Co. received from one of its customers, Webb Co., a 90 day, 11%, $6,000 note receivable, in exchange for contract services provided. Woods Co. has a March 31 year end. Webb Co. honoured the note at maturity. Prepare the entries for the issuance and the maturity of the note. * 35) Joy Co. uses the allowance method of accounting for bad debts. Their Allowance for Doubtful Accounts has a year-end credit balance, prior to adjustment, of $700. The bad debts are estimated at 3% of $600,000, the net credit sales. Prepare the year end adjusting journal entry for bad debt expense. *