Pearl Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have been recorded in 2020. The following information related to depreciation of fixed assets is provided to you. 1. Pearl purchased equipment on January 2, 2017, for $89,200. At that time, the equipment had an estimated useful life of 10 years with a $5,200 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $3,100 salvage value. During 2020, Pearl changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations present depreciation on both bases for 2018 and 2019. 2. Straight-line Declining-balance 2019 $27,000 48,000 2018 $27,000 60,000 3. Pearl purchased a machine on July 1, 2018, at a cost of $120,000. The machine has a salvage value of $20,000 and a useful life of 8 years. Pearl's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage value. Prepare the journal entries to record depreciation expense for 2020 and correct any errors made to date related to the information provided. (Ignore taxes. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Debit Credit No. Account Titles and Explanation 1. Depreciation Expense 15,225 Accumulated Depreciation-Equipment 15,225 2. Depreciation Expense 20,250 Accumulated Depreciation-Buildings 20,250 3. Depreciation Expense 12,500 12,500 Accumulated Depreciation-Machinery (To record current year depreciation.) Accumulated Depreciation-Machinery 3,750 Retained Earnings 3,750 (To correct prior year depreciation.) Show comparative net income for 2019 and 2020. Income before depreciation expense was $320,000 in 2020, and was $300,000 in 2019. (Ignore taxes.) PEARL COMPANY Comparative Income Statements For the Years 2020 and 2019 2020 2019 Income before depreciation expense $ 320000 $ 300000 Depreciation expense 47975 i Net income $ 272025 $ $