Question 2: Property, Plant & Equipment and Intangibles (13 marks)

Carleton Corporation purchased machinery on January 1, 2021, at a total cost of $90,000. Carleton paid $15,000 in cash and signed a 3-year note payable for the balance. Estimated residual value is $10,000, estimated life of the machinery is 5 years or 50,000 hours.

Required:

1. Prepare the journal entry to record the purchase of the machinery.
2. Compute depreciation expense for 2021 under straight-line, double-declining balance, and units-of-production methods. The machine was used for 8,000 hours in 2021.
3. Independent from part 1: Assume the company has selected and has been recording depreciation using the straight-line method. On December 31, 2024 (after depreciation for 2024 has already been recorded), the machinery is sold for $37,000 in cash. Prepare the journal entry to record the sale of the machinery.