Roxana Inc. (Roxana) recently purchased a new stamping machine for its workshop. The cost of the machine included cost,

$225,000; taxes, $28,000; delivery, $12,000; installation, $5,000; and testing, $22,000.

Roxanna’s management expects to use the machine for eight years, at which time it will be replaced. Management uses straight-line depreciation on assets of this type and estimates the machine has a residual value of $25,000.

Required:

a. Prepare the journal entry to record the purchase of the new machine.

b. Prepare a depreciation schedule showing the depreciation expense for each of the eight years Roxana expects to keep the machine and the carrying amount of the machine at the end of each year. Assume that the machine was purchased midway through the fiscal year and only a half-year’s depreciation is to be expensed in the first year.

c. Suppose the machine sold at the end of the third year for $75,000. Prepare the journal entry to record the sale and any other journal entries required with respect to the display cases in the third year.