Nash company purchased machinery on january 1, 2017, for $91,200. the machinery is estimated to have a salvage value of $9,120 after a useful life of 8 years.
1. compute 2017 depreciation expense using the sum-of-the-years'-digits method.

$18,240

Explanation:

The computation of the depreciation expense under the um-of-the-years'-digits method is shown below:

= (Original cost - salvage value) × useful life ÷ sum of useful life

= ($91,200 - $9,120) × 8 ÷ 36

= $82,080  × 8 ÷ 36

= $18,240

The sum of useful life would be

= 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1

= 36

The method is same as we do in straight-line but the difference is of sum of useful life.

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23

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