P9-3A On January 1, 2015, Evers Company purchased the following two machines for use
in its production process.
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Machine A: The cash price of this machine was $48,000. Related expenditures (L
included: sales tax $1,700, shipping costs $150, insurance during shipping
$80, installation and testing costs $70, and $100 of oil and lubricants
to be used with the machinery during its first year of operations. Evers
estimates that the useful life of the machine is 5 years with a $5,000
salvage value remaining at the end of that time period. Assume that the
straight-line method of depreciation is used.
Machine B: The recorded cost of this machine was $180,000. Evers estimates that
the useful life of the machine is 4 years with a $10,000 salvage value
remaining at the end of that time period.
Instructions
(a) Prepare the following for Machine A.
(1) The journal entry to record its purchase on January 1, 2015.
(2) The journal entry to record annual depreciation at December 31, 2015.
