On 2 January 2015, Johnston Ltd purchased a machine with a list price of $234 300 (including GST) and credit terms of 2/10, n/30. Payment was made within the discount period. Freight costs of $5400 plus GST and installation costs of $5280 plus GST were also paid. The machine has a useful life of 4 years and a residual value at the end of its useful life of $24 000.

Required

A. Determine the amount that should be debited to the machinery account and prepare a general journal entry to record the purchase, assuming a financial year ending 31 December.

B. Determine the amount of depreciation expense for each of the 4 years ending 31 December assuming use of:

1. The straight-line depreciation method

2. The diminishing balance method of depreciation.

C. Prepare a journal entry to record depreciation expense for the year ending 31 December 2015 under the diminishing balance method.