Finesse Co. purchases and installs a machine on January 1, 2011, at a total cost of $92,750. Straight- line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is disposed of on July 1, 2015, during its fifth year of service.

Required:

1.) Prepare entries to record the partial years depreciation on July 1, 2015 (2 mark)

2.) Prepare entries to record the disposal under the following situations (4 marks)

i) The machine was sold for $33,125 cash ii) The machine is sold for $35,000 cash