LO 3, 4 Comparison of Depreciation Methods CASH FLOW P3. Zeigler Manufacturing Company purchased a robot for $720,000 at the beginning of year 1. The robot has an estimated useful life of four years and an estimated residual 1a: Depreciation, year 3: $165,000 value of $60,000. The robot, which should last 20,000 hours, was operated 6,000 hours 1b: Depreciation, in year 1; 8,000 hours in year 2; 4,000 hours in year 3; and 2,000 hours in year 4. year 3: $132,000 1c: Depreciation, REQUIRED year 3: $90,000 1. Compute the annual depreciation and carrying value for the robot for each year assuming the following depreciation methods: (a) straight-line, (b) production, and (c) double-declining-balance. 2. If the robot is sold for $750,000 after year 2, what would be the amount of gain or loss under each method?V 2: End of month estimated product warranty liability: 5163.160 Product Warranty Liability P3. Reliance Company manufacmres and sells wireless video cell phones, which it guar- antees for ve years. Ifa cell phone fails, it is replaced free, but the customer is charged a service fee for handling. In the past, management has found that only 3 percent of the cell phones sold required replacement under the warranty. The average cell phone costs the company $240. At the beginning of September, the account for estimated liability for product warranties had a credit balance of $208,000. During September, 250 cell phones were returned under the warranty. The company collected $9,860 of service fees for handling. During the month, the company sold 2,800 cell phones. REQUIRED 1. Prepare journal entries to record (a) the cost of cell phones replaced under warranty and (b) the estimated liability for product warranties for cell phones sold during the month. 2. Compute the balance of the Estimated Product Wan-anty Liability account at the end of the month. LO 2, 3, 4, 5, 8 Comprehensive Stockholders' Equity Transactions and Stockholders' Equity RATIO P4. Kraft Unlimited, Inc., was organized and authorized to issue 5,000 shares of $100 par value, 9 percent preferred stock and 50,000 shares of no par, $5 stated value com- GENERAL LEDGER mon stock on July 1, 2014. Stock-related transactions for Kraft Unlimited follow. V 2: Total stockholders' equity: $236,520 July 1 Issued 10,000 shares of common stock at $11 per share. 1 Issued 500 shares of common stock at $11 per share for services rendered in connection with the organization of the company. 2 Issued 1,000 shares of preferred stock at par value for cash. 10 Issued 2,500 shares of common stock for land on which the asking price was $35,000. Market value of the stock was $12. Management wishes to record the land at the market value of the stock. Aug. 2 Purchased 1,500 shares of its common stock at $13 per share. 10 Declared a cash dividend for one month on the outstanding preferred stock and $0.02 per share on common stock outstanding, payable on August 22 to stockholders of record on August 12. 12 Date of record for cash dividends. 22 Paid cash dividends. REQUIRED 1. Prepare journal entries to record these transactions. 2. Prepare the stockholders' equity section of Kraft's balance sheet as it would appear on August 31, 2014. Net income for July was zero and August was $11,500