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Question
https://www.chegg.com/homework-help/questions-and-answers/p93-lo-2-january-1-2020-pele-industries-purchased-following-two-machines-use-production-pr-q60792680

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Answers
Given details are as follows:

Particulars Amount

Cash price $35,000

Sales tax $2,200

Shipping costs $150

Insurance $80

Installation and testing $70

Scrap value $5,000

The expenses incurred in moving goods from one place to another include shipping prices as well as fees for handling, packing, and related logistics services needed to complete
the delivery process.

Computation of cost of machine:

Particulars Amount

Cash price $35,000

Add: Sales tax $2,200

Add: Shipping costs $150

Add: Insurance $80

Add: Installation and testing $70

Cost of machine $37,500

Computation of depreciation:

Cost−Scrap value
Depreciation =
Estimated life

$37500 − $5000
=
5

= $6500

Required journal entries are as follows:

Governments apply sales tax, a consumption-based tax, on the sale of goods and services. Usually a portion of the purchase price, companies collect it on the government's
behalf.

Final Answer
Depreciation expense for the year is

$6500.

Depreciation expense for the year is

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