On January 2, 2016, Verdi Company acquired a machine for $85,000. In addition to the purchase price, Verdi spent $2,000 for shipping and installation, and $2,500 to calibrate the machine prior to use. The company estimates that the machine has a useful life of five years and a residual value of $7,000.

Required a. Prepare journal entries to record the acquisition costs Description Debit Credit 1/2/2016 Machinery 89,500 0 Cash 89,500 b. Calculate the annual depreciation expense using straight-line depreciation and prepare a journal entry to record depreciation expense for 2016 Description Debit Credit 12/31/2016 Depreciation expense 16,500 Accumulated depreciation 0 16,500 C. On December 31, 2019, Verdi sold the machine to another company for $12,000. Prepare the necessary journal entry to record the sale Description Debit Credit Cash Accumulated depreciation 0