QUESTION 1 Martin Company purchases a machine at the beginning of the year at a cost of $60,000 The machine is depreciated using the double-declining-balance method The machine's useful life is estimated to be 4 years with a $5 000 salvage value. The machine s book value at the end of year 3 is. S52 500 $45 000 $30 000 NS6 875 S7 500. On March 12. Fret Company sold merchandise in the amount of 57,800 to Babson Company, with credit terms of 2/10. n/30. The cost of the items sold is $4.500. Fret uses the perpetual inventory system and the gross method of accounting for sales. On March 15, Babson retums some of the merchandise. The selling price of the merchandise is 5600, and the cost of the merchandise returned is $350. Babson pays the invoice on March 20 and takes the appropriate discount. The journal entry that Fret makes on March 20 i O Account Title Debit Credit Cash 4,500 Accounts Receivable 4.500 O Account Title Debit Credit Cash 7.800 Accounts Receivable 7.800 Account Title Debit Credit Cash 7,056 Sales Discounts 144 Accounts Receivable 7 200 Account Title Debit Credit Cash 7 056 Accounts Receivable 7 056 Account Title Debit Credit Cash 7,644 Sales Discounts 156 Accounts Receivable 7.800