Oconnor company ordered a machine on january 1 2012 at a

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Reference no: EM13484151

O'Connor Company ordered a machine on January 1, 2012, at a purchase price of $40,000. On the date of delivery, January 2, 2012, the company paid $10,000 on the machine and signed a Iong-term note payable for the balance. On January 3, 2012, it paid $350 for freight on the machine. On January 5, O'Connor paid installation costs relating to the machine amounting to $2,400. On December 31, 2012 (the end of the accounting period), O'Connor recorded depreciation on the machine using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $4,750.

Required:

1.Indicate the effects (accounts, amounts, and + for increase, ? for decrease) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. (Enter all amounts as positive values.)

2. Compute the acquisition cost of the machine.

3.Compute the depreciation expense to be reported for 2012. (Do not round intermediate calculations.)

4.What should be the book value of the machine at the end of 2013? (Do not round intermediate calculations.)

Reference no: EM13484151

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