On March 1, 2011, Zephur Winds Ltd. purchased a machine for $80,000 by paying $20,000 down and issuing a note for the balance. The machine had an estimated useful life of nine years, and an estimated residual value of $8,000. Carson uses the straight-line-method of depreciation and has a December 31 year end. On October 30, 2013, the machine was sold for $62,000.
Required:
a. Prepare the journal entry to record the acquisition of the machine.
b. Assuming that the depreciation was correctly calculated and recorded in 2011 and 2012, prepare the journal entries to update the depreciation and record the sale of the machine on October 30, 2013.
c. Assume instead that the company used the double-declining-balance method to depreciate the cost of the machine:
i. What amount of depreciation would be recorded in 2011 and 2012?
ii. What journal entries would be required to update the depreciation and record the sale of the machine on October 30, 2013?