Reference no: EM132942500

A company purchased a machine at the cost of $675,900 on Feb 1 of year 1. On the same day, the business paid the shipping company $7,500 to deliver the machine and paid $16,400 to another business to install and test the new machine. The annual insurance policy for the new machine is $8,600. The company's fiscal year end is October 31.

• The company's accounting policy is to depreciate all machines using the double diminishing balance method. The machine has an expected useful lifespan of eight-years and an estimated residual value of $30,000. However, the company discovered the machine did not meet its business requirements, so it sold the machine on April 1, year 3, for $398,500. Perform all your calculations to the nearest dollar. Show all your work.

Problem (a) Prepare the journal entries to record the purchase of the machine and year-end adjusting entries for year 1 and Year 2. Not necessary to prepare the adjusting entry to record insurance expense.

Problem (b) Show the presentation of the machine in the balance sheet, year-end, year 2.

Problem (c) Prepare the journal entry(s) to record the sale of the machine.