Cola Company purchased a bottling machine on October 1, 2018 for $250,000. The estimated useful life is 25 years and they are using straight-line depreciation. On October 1, 2019, they spent $46,000 on the machine to double its capacity and $5,000 on routine cleaning. The company's year end is September 30. What should the depreciation expense be at September 30, 2020?

$10,000

$30,000

$12,200

$11,917

Question 2

Ruby's & Rings Inc. offers a two-year assurance warranty against failure of its products. The estimated liability is 4% of sales in the year of sale and 6% in the second year. Sales for 2020 and 2021 were: $2,500,000 and $2,800,000, respectively. The company incurred no warranty costs in 2020 but in 2021 they spent $175,000 on repairs related to the warranties issued 2020 and 2021. The warranty provision at the 2020 year end was

$0.

$100,000.

$150,000.

$250,000.