E9-3 Determining Financial Statement Effects of an Asset Acquisition and Straight-Line Depreciation (LO 9-2, LO 9-3) O'Connor Company ordered a machine on January 1 at a purchase price of $40,000. On the date of delivery, January 2, the company paid $10,000 on the machine and signed a long-term note payable for the balance. On January 3, it paid $350 for freight on the machine. On January 5, O'Connor paid cash for installation costs relating to the machine amounting to $2,400 On December 31 (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 any decreases to account balances with a minus sign.) Liabilities Stockholders' Equity Dato Assets Jan Note Payable (long-term) 1 Jan Cash 2 Jan 3 Jan 5 2. Compute the acquisition cost of the machine Acquisition Cost 3. Compute the depreciation expense to be reported for the first year. (Do not round Intermediate calculations.) Depreciation Exporge 4. What should be the book value of the machine at the end of the second year? (Do not round Intermediate calculations.) Book Value