Leslie Company sells business stationery, imprinted with a customer’s business name and address. To do this, it purchased a printing machine costing $48,000 on January 1, 2001. The machine has an expected useful life of five years and an estimated salvage value of $3,000. Leslie Company uses straight-line depreciation for all of its depreciable assets.

On August 1, 2004, the manager of the print shop was persuaded to purchase a new machine that operated more efficiently. The old machine was sold at that time for $5,000.

a. Calculate the depreciation expense recorded on the old machine for each year of use.

b. Calculate any gain or loss on disposal of the old machine.

c. Show how information about the printing machine transactions would be reported on the statement of cash flows for years 2001 through 2004. Assume the indirect format is used.

d. How would the information about the printing machine affect the income statement for years 2001 through 2004?