The Perth Construction Company purchased a piece of machinery on June 29, 2013, for $53 000. Freight costs came to $800. It cost $1 700 to install and test the machinery. At this time it was estimated that the machine would be used for six years and would have a residual value of $8,000 at that time.

Before recording the 2016 depreciation expense, the owners realized that this machinery would last only five years, and therefore revised the amortization expense calculation. On July 2, 2017, the machine broke down and rather than repairing it, the company decided to sell it for $12 000.

b) Calculate the depreciation charges that would appear on the 2013 and 2014 income statements, using the straight-line method of depreciation.

a) Prepare the journal entry to record the purchase of the machine on June 29, 2013. (K/U - 2 marks) Date Particulars Debit Credit c) Show the journal entry for the 2013 depreciation. (K/U-2 marks) Date Particulars Debit Credit d) Show how the machine would appear in the Perth Construction Company Balance Sheet on December 31, 2015, presuming the straight-line method of depreciation is used. (App - 2 marks) e) Prepare the journal entry for the July 2, 2017 transaction. (App - 5 marks) Date Particulars Debit Credit