Recording Asset Acquisition, Depreciation, and DisposalCost Behavior Analysis in a Restaurant: High$-$Low Cost Estimation

Assume a Papa John's restaurant has the following information available regarding costs at representative levels of monthly sales:Cost Behavior Analysis in a Restaurant: High$-$Low Cost Estimation

Assume a Papa John's restaurant has the following information available regarding costs at representative levels of monthly sales:

$($a$)$ Identify each cost as being variable, fixed, or mixed.

$($b$)$ Use the high$-$low method to develop a schedule identifying the amount of each cost that is fixed per month or variable per unit. Total the amounts under eac

category to develop an equation for total monthly costs.

Round variable cost answers to two decimal places.

$($c$)$ Predict total costs for a monthly sales volume of $9,800$ units.

On January $2,2016,$ Verdi Company acquired a machine for $$75,000.$ In addition to the purchase price, Verdi spent $$2,100$ for shipping and installation, and $$2,600$ to

calibrate the machine prior to use. The company estimates that the machine has a useful life of $5$ years and a residual value of $$11,000.$

Required

a$.$ Prepare journal entries to record the acquisition costs.

b$.$ Calculate the annual depreciation expense using straight$-$line depreciation and prepare a journal entry to record depreciation expense for $2016.$

c$.$ On December $31,2019,$ Verdi sold the machine to another company for $$14,000.$ Prepare the necessary journal entry to record the sale.