On January 2, 2015, Summers Company bought a machine for use in operations. The machine has an estimated useful life of eight years and an estimated residual value of $2,600. The company provided the following expenditures:

1. Invoice price of the machine, $85,000.
2. Freight paid by the vendor per sales agreement, $1,000.
3. Installation costs, $2,400 paid in cash.
4. Payment was made as follows:

On January 2:

The installation costs were paid in cash.

Summers Company common stock, par $1; 2,000 shares (market value, $3.50 per share).

Note payable, $60,000; 11.5 percent due April 16, 2015 (principal plus interest).

Balance of invoice price to be paid in cash. The invoice allows for a 3 percent discount for cash paid by January 12.

On January 15:

Summers Company paid the balance due.

Required:

Indicate the accounts, amounts, and effects (+ for increase and for decrease) of the purchase and subsequent cash payment on the accounting equation.

The machine was ready and put into operations on Jan. 10, 2015. Calculate the depreciation expense for the year 2015 and show how it is going to be reported in the financial statements assuming the company uses Straight line method

Repeat the 2^nd requirement assuming the company uses the Double declining method