Muscato Ltd acquired a new juicing machine for cash on 1 March 20X2. The price of the machine was $35 000, but Muscato Ltd received a discount of 1% for early payment. In addition, Muscato Ltd paid $200 for the delivery of the machine and $300 for installation. The machine was expected to have a useful life of 10 years with a residual value estimated at $8 000.

On 2 August 20X3, extensive repairs were carried out on the machine for $12 000 cash. After these repairs were undertaken Muscato Ltd expected that the machine has remaining useful life of 11 years and it revised its estimated residual value to $11 000. The machine was eventually sold on 1 May 20X5 for $20 000 cash.

Muscato Ltd uses the straight-line depreciation method, recording depreciation to the nearest whole month. The end of the reporting period is 30 June. Ignore GST.

Question: Prepare journal entries to record the sale of the machine on 1 May 20X5. Calculate the profit or loss Muscato Ltd made with the sale of the machine. Show your calculations.