Exercise 4 (30 Points) In recent years, Transportation-Hub Ltd purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods were selected. Information concerning the buses is summarized below. Bus Acquired Cost 1 01/01/2018 90 000 2 01/01/2018 160 000 Residual Value Useful Life in Years 6 000 Depreciation Method 6 Straight line 10 000 5 Declining balance 5 Units of activity 3 01/01/2019 88 000 8 000 For the declining-balance method, the company uses the double-declining rate. For the units- of-activity method, total miles are expected to be 120,000. Actual miles of use in the first 3 years were 2019: 24 000; 2020: 36 000; and 2021: 30 000. a) Compute the amount of accumulated depreciation on each bus on December 31, 2020 b) If Bus 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in (1) 2018 and (2) 2019? Exercise 5 (45 points) Beautiful Manufacturing (BeaMan) sells its products with a 75-day warranty for defective merchandise. Based on past experience, BeaMan estimates that 3% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $20/ unit. The units sold and units defective that occurred during the last 2 months of 2021 are as follows. Units defective prior to December 31 Units sold Month November 35 000 800 500 December 42 000 Prepare the journal entries to record the provision for warranties and the costs incurred in honoring 1,300 warranty claims. (Assume actual costs equal expected costs)