On January 2, 2010, Seamus International Company purchased a new corporate airplane. The following costs are related to the purchase:

Airplane, base price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,200,000

Cash discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000

Sales tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000

Delivery charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000

Required:

1. Prepare the journal entry to record the payment of these items on January 2, 2010.

2. Ignore your answer to part (1) and assume that the airplane cost $1,100,000 and has an expected useful life of 10 years or 1,600 hours. The estimated salvage value is $120,000. Using units-of-production depreciation and assuming that 160 hours are fl own in 2011, calculate the amount of depreciation expense to be recorded for the second year.

3. Ignore the information in parts (1) and (2) and assume that the airplane costs $1,100,000, that its expected useful life is 10 years, and that its estimated salvage value is $150,000. The company now uses the straight-line depreciation method. On January 1, 2013, the following balances are in the related accounts:

Airplane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,100,000

Accumulated Depreciation, Airplane . . .. . . . . . . . . . . . . . . . . . . . . . . 285,000

Prepare the necessary journal entries to record the sale of this airplane on July 1, 2013, for $800,000.