On January 1, Experience Sound Co. paid $47,000 for production equipment which was expected to provide 16,000 hours of recording time. The company estimated that the equipment would be used for the next 10 years, at the end of which time it could be sold for $6,000. During the first three years of life, 1,920, 1,600, and 2,100 hours, respectively, of recording time was used. A. Calculate depreciation expense for Year 1 for Experience Sound Co. using: 1. Straight-line depreciation 2. Double-declining depreciation B. What journal entry would be made to record depreciation expense for Year 1? Assume Straight-line depreciation. C. Which of the depreciation methods (straight-line or double declining) is preferable for tax purposes? Explain. Q2

The following information is available from the financial statements of Band of Gypsy Corp. for the year ended December 31:

	Net income	$260,000
	Increase in accounts payable	$5,000
	Depreciation expense	$10,000
	Payment of dividends	$2,500
	Decrease in accounts receivable	$7,500
	Increase in inventories	$5,000
	Decrease in income taxes payable	$10,000

What are Band of Gypsy Corp.s cash flows from operating activities?