Part 3: Each problem worth 6 points.

(1) Data below:

Machine cost 20,000

Accumulated depreciation 15,000

Sellling Date Jan. 2nd

Selling price 7,000

Required: prepare entry for the cash sale of the machine on Jan. 2nd.

(2) Data below:

New machine cost 6,000

Increase in net cash flows 1,000

Number of years in net cash flow 8

Disposal price 1,000

Required rate of return 12%

Required: Is this a good investment? (Hint: find the net present value)

(3) Data on the purchase of a factory:

Appraisal Values:

Land 100,000

Building 200,000

Equipment 300,000

Cash purchase cost: 750,000

Required: Prepare the entry for the purchase of the factory.

(4) Data:

Cost of the machine 15,000

Purchase date Jan. 3rd

Useful life in years 10

Residual value 2,000

Required:(1) Prepare the entry for depreciation expense for the third year using

double decling balance.

(2) What is the carrying value after allocating depreciation after three

years?

(5) Data for Harry Computers in January:

Average cost of each computer 150

Number of years for the warranty 3

Number of computers sold 2,000

Number of computers replaced under the warranty 50

Required:(1) Find the estimated liability for the computer warranty with a

replacement rate of 10%

(2) Find the computer warranty expense for the replaced computers