1. ABC Corporation also buys a machine for $20,000 on credit. This results in an addition to the Machinery fixed assets account, and an increase in the accounts payable (liability) account. The entry is:

   1. ......................................................................Debit...............................Credit

      Machinery - Fixed Asset ....................................................................$20,000

      Accounts Payable ...............................................................................$20,000

   2. .......................................................................Debit................................Credit

      Accounts Payable .......................................$20,000

      Machinery - Fixed Assets ...................................................................$20,000

   3. ......................................................................Debit................................Credit

      Accounts Payable ......................................$20,000

      Machinery - Fixed Assets ..........................$20,000

   4. .......................................................................Debit................................Credit

      Machinery - Fixed Asset ............................$20,000

      Accounts Payable ................................................................................$20,000

Use this information for the next question:

Equipment was purchased for Company A for $170,000.

Additional costs included: shipping charges of $10,000 and a cost of $20,000 for building a foundation and installing the equipment. These costs were added to the total depreciable value of the equipment. It is estimated that the equipment will have a $30,000 salvage value at the end of its 5-year useful life.

Depreciation expense each year using the straight-line method will be:

1. $29,000

2. $68,000

3. $40,000

4. $34,000

1. Depreciation expense for Company A the first year using the Double Declining Balance method will be:

   1. $60,000

   2. $34,000

   3. $68,000

   4. $80,000