Practice Problem #$1$

Alternative Depreciation Methods & Impact of Sale of depreciated asset

The following events pertain to Sanders Rental Company $($SRC$).$

SRC was started when it issued common stock for $$21,000$ cash.

On January $1,$ Year $1,$ SRC paid cash to purchase an automobile. The car dealer gave Sanders a $$1,000$ cash discount off the $$19,000$ list price. However, Sanders paid an additional $$2,000$ to equip the car with a more luxurious interior so it would have greater appeal to his clientele. Sanders expected the car to have a fouryear useful life and a $$4,000$ salvage value. SRC expected to lease the car for $100,000$ miles before disposing of it$.$

SRC leased the car to a customer who drove it $30,\frac{000}{10},\frac{000}{40},\frac{000}{25},000$ miles during Year $1,$ Year $2,$ Year $3,$ and Year $4,$ respectively and assumed the following revenue stream for each scenario:

$\backslash$table$[[$Revenue Stream$],[$Scenario$,$Year $1,$Year $2,$Year $3,$Year $4],[1,$$$7,200,$$$7,200,$$$7,200,$$$7,200$