On September 1, Adolfo Banderas was working as an accountant for Life Is Wine Co. The firm had just received a new machine for labeling wine bottles that was supposed to start working in a couple of days.

Please read the facts described below and help Adolfo to record the described events on the general ledger.

1. On September, 1 Adolfo receives the invoice from the manufacturer of the machine. Information on the invoice includes:

• Price: $30,000

• Payments: 60 percent at delivery, 40 percent on October 30

2.. The same day, Adolfo receives an e-mail from the production manager, Mr. Dislexis, with his best estimate for some of the parameters of the machine. The parameters are as follows:

• Expected life of the machine: six years.

• Scrap value: $5,000.

• The machine is expected to start operating in a couple of days.

3. On Nov, 1 Adolfo receives another e-mail from Mr. Dislexis. The e-mail reads as follows:

Hi Adolfo, I regret to inform you that the information I sent to you about the labeling machine was wrong. The right values are as follows.

• Expected life of the machine: five years

• Scrap value: \($6,000\) Sorry about the inconvenience, Mr. Dislexis 4. During November, Mr. Dislexis happened to visit the packaging fair in Paris, where he found a faster and cheaper machine for labeling. He got so excited that he decided to buy it. Lead-time for delivery was one month, the price being \($15,000\). He was lucky to find someone willing to buy the old machine at \($20,000\). The agreement included that the old machine would be sent to the new owner on November 30 and he would be paid cash. Adolfo received this information the following day.

a. Given facts 1 and 2, record all necessary transactions on the general ledger (use T-accounts)

for September and October.

b. Given fact 3, modify the general ledger taking into account the new information provided.

c. Given fact 4, record all the transactions regarding the machines in the general ledger until November 30.

d. For the three questions above, what accounting principles did you use when recording the transactions?