O Connor Company ordered a machine on January 1 at a

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O’Connor Company ordered a machine on January 1 at a purchase price of $ 40,000. On the
date of delivery, January 2, the company paid $ 10,000 on the machine and signed a long-term
note payable for the balance. On January 3, it paid $ 350 for freight on the machine. On
January 5, O’Connor paid cash for installation costs relating to the machine amounting to $
2,400. On December 31 (the end of the accounting period), O’Connor recorded depreciation on
the machine using the straight- line method with an estimated useful life of 10 years and an
estimated residual value of $ 4,750.Required:1. Indicate the effects (accounts, amounts, and +
or –) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. Use the
following schedule:2. Compute the acquisition cost of the machine.3. Compute the depreciation
expense to be reported for the first year.4. What should be the book value of the machine at the
end of the second year?View Solution:
O Connor Company ordered a machine on January 1 at a

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