Nicole's Getaway Spa (NGS) purchased a hydrotherapy tub system to add to the wellness programs at NGS. The machine was purchased at the beginning of the year at a cost of $4,400. The estimated useful life was five years, and the residual value was $400. Assume that the estimated productive life of the machine is 12,600 hours. Expected annual production is: year 1, 3,500 hours; year 2, 2,200 hours; year 3, 2,800 hours; year 4, 1,500 hours; and year 5, 2,600 hours. 2. Assume NGS sold the hydrotherapy tub system for $1,900 at the end of year 3. Prepare the journal entry to account for the disposal of this asset under the three different methods. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Straight-line method: No Transaction Debit Credit A 01 Answer is complete but not entirely correct. General Journal Accumulated depreciation Cash Loss on bond retirement x Equipment 2.400 1.900 100 4.400 Units-of-production method: Answer is complete but not entirely correct. No Transaction General Journal Debit Credit 02 Cash 1.900 2.698 Accumulated depreciation Gain on bond retirement Equipment x 198 4.400 Double-declining balance method: Answer is complete but not entirely correct. General Journal No Transaction Debit Credit 03 Cash 1.900 x 3.450 Accumulated amortization Gain on bond retirement Equipment x 950 4,400 3. The following amounts were forecast for year 3: Sales Revenues, $38,000: Cost of Goods Sold, $30,000: Other Operating Expenses, $3,400; and Interest Expense, $740. Create an income statement for year 3 for each of the different depreciation methods, ending at Income before Income Tax Expense. (Don't forget to include a loss or gain on disposal for each method.) (Do not round intermediate calculations. Round depreciation expense to the nearest whole number.) Answer is not complete. NICOLE'S GETAWAY SPA (Forecasted) Income Statement For the Year Ended December 31, Year 3 Double- Straight- Units-of- Line Production Declining- Balance Sales revenue $ 38,000 $ 38.000$ 38.000 Cost of goods sold 30,000 30.000 30.000 Gross profit $ 8,000 $ 8.000$ 8.000 Operating expenses. Other operating expenses $ 3.400$ 3.400$ 3.400 Depreciation expense 800 889 634 Interest expense x 740 X 740 X 7403 Total operating expenses $ 4.940 X $ 3,060 X $ 100 5.029 $ 2.971 X s 4.774 3.226 Income from operations Loss on bond retirement Gain on bond retirement Income before income tax expense x x 198 x 950 $ 2.960 $ 2.773 $ 2 276