On January 1, 2017, Abraham SA purchased the following two machines for use in its production process.

Machine A: The cash price of this machine was 55,000. Related expenditures included: sales tax 3,300, shipping costs 325, insurance during shipping 75, installation and testing costs 1,300, and 90 of oil and lubricants to be used with the machinery during its first year of operation. Abraham estimates that the useful life of the machine is 4 years with a 6,000 residual value remaining at the end of that time period.

Machine B: The recorded cost of this machine was 130,000. Abraham estimates that the useful life of the machine is 5 years with a 10,000 residual value remaining at the end of that time period.

Required

(a) Prepare the following for Machine A. (1) The journal entry to record its purchase on January 1, 2017. (2) The journal entry to record annual depreciation at December 31, 2017, assuming the straight-line method of depreciation is used. (b) Calculate the amount of depreciation expense that Abraham should record for Machine B each year of its useful life under the following assumption.

(1) Abraham uses the straight-line method of depreciation.

2) Abraham uses the declining-balance method. The rate used is twice the straight-line rate. (3) Abraham uses the units-of-activity method and estimates the useful life of the machine is 24,000 units. Actual usage is as follows: 2017, 4,700 units; 2018, 8,200 units; 2019, 6,800 units; 2020, 2,500 units; and 2021, 1,800 units.