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E7-19A. (Learning Objectives 3,4:Determining depreciation amounts by three methods; depreciation) West Side Pizza bought a used Nissan delivery van on January 2, 20X6, for 19,200.

E7-19A. (Learning Objectives 3,4:Determining depreciation amounts by three methods; depreciation) West Side Pizza bought a used Nissan delivery van on January 2, 20X6, for 19,200. The van was expected to remain in service for four years (32,000 miles). At the end of its useful life, West Side's officials estimated that the van's residual value would be $3,200. The van traveled 10,000 miles the first year, 12,000 miles the second year, 4,000 miles the third year, and 6,000 miles the fourth year. Prepare a schedule of depreciation expense per year for the van under the three depreciation methods. (For units-of-production and double-declining- balance, round to the nearest two decimals after each step of the calculation.) Which method best tracks the wear and tear on the van? Which method would West Side prefer to use for income tax purposes? Explain in detail why West Side prefers this method.

E7-23A. (Learning Objectives 2, 3: Analyzing the effect ofa sale ofa PPE; DDB deprecia- tion) Assume that on January 2, 20X6, Maxwell of Michigan purchased fixtures for $8,900 cash, expecting the fixtures to remain in service for five years. Maxwell has depreciated the fixtures on a double-declining-balance basis, with $1,400 estimated residual value. On August 31, 20X7, Maxwell sold the fixtures for $2,800 cash. Record both the depreciation expense on the fixtures for 20X7 and the sale of the fixtures. Apart from your journal entry, also show how to compute the gain or loss on Maxwell's disposal of these fixtures.

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