The following account appears in the record of the Kart Company MACHINERY Date 2003 Jan. 2 Dec. 31 2004 Jan 2 Dec. 31 2005 Jan. 2 Aug 2 2 Dec. 31 2006 Jan. 2 2 Dec. 31 2007 Jan 2 Dec. 31 Explanation Purchased Machine No. 1 Depreciation Purchased Machine No. 2 Depreciation Purchased Machine No. 3 Machine No. 1, ordinary repairs Machine No. 2, major repairs originally estimated life is not extended Depreciation Purchased Machine No. 4 Machine No. 1, sold Depreciation Machine No. 2, major repairs originally estimated life is extended Debit $50,000 40,000 60,000 2,000 4,000 44,000 Depreciation The accounts have not been closed for the year 2007. 10,000 Credit $5,000 9,000 15,000 24,000 21,000 18,000 Balance $50,000 45,000 85,000 76,000 136,000 138,000 142,000 127,000 171,000 147,000 126,000 136,000 118,000 Required: Prepare work papers showing the correct accounts, and prepare all necessary audit adjustments. Straight line depreciation at 10% per year is to be used. For purposes of this problem ignore salvage values.