3. Fruity Berhad a manufacturer of lozenges purchased a new piece of Equipment 1 on 1 April 2013 which was priced at RM200,000 from an equipment manufacturer. Equipment 1 was transported and installed on the same day of purchase. Transportation costs involved amounted to RM1,000, while the insurance against damage for Equipment 1 while being transported to the business premise at Nilam Industrial Park amounted to RM600. Fruity had to pay RM7,400 to the vendor to install Equipment 1 at its premise. Assume that the equipment can be used for years and the salvage value is estimated to be RM10,000. Equipment 2 was bought on 1 February 2014 for RM150,000 to cater for the rapidly growing demand from Fruity's customers. Estimated useful life for Equipment 2 is 10 years from the date of purchase with the estimated salvage value to be 10% of the cost. All payments were made by cheque except for the equipment bought on 1 February 2014 which was partly [paid by cheque of RM50,000 and partly by a loan from Karisma Bank. Fruity uses the straight-line method for calculating depreciation. The depreciation expense to be apportioned on the basis of one month's ownership requires one month's depreciation expense. The company's financial year ends on 31 December each year. Required: Prepare the following: (a) Journal entries to record the acquisition of the assets in 2013 and 2014. (b) Equipment account and accumulated depreciation of equipment account for the year 2013 and 2014.
3. Fruity Berhad a manufacturer of lozenges purchased a new piece of Equipment 1 on 1 April 2013 which was priced at RM200,000 from an equipment manufacturer. Equipment 1 was transported and installed on the same day of purchase. Transportation costs involved amounted to RM1,000, while the insurance against damage for Equipment 1 while being transported to the business premise at Nilam Industrial Park amounted to RM600. Fruity had to pay RM7,400 to the vendor to install Equipment 1 at its premise. Assume that the equipment can be used for years and the salvage value is estimated to be RM10,000. Equipment 2 was bought on 1 February 2014 for RM150,000 to cater for the rapidly growing demand from Fruity's customers. Estimated useful life for Equipment 2 is 10 years from the date of purchase with the estimated salvage value to be 10% of the cost. All payments were made by cheque except for the equipment bought on 1 February 2014 which was partly [paid by cheque of RM50,000 and partly by a loan from Karisma Bank. Fruity uses the straight-line method for calculating depreciation. The depreciation expense to be apportioned on the basis of one month's ownership requires one month's depreciation expense. The company's financial year ends on 31 December each year. Required: Prepare the following: (a) Journal entries to record the acquisition of the assets in 2013 and 2014. (b) Equipment account and accumulated depreciation of equipment account for the year 2013 and 2014.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:3. Fruity Berhad a manufacturer of lozenges purchased a new piece of Equipment 1 on 1
April 2013 which was priced at RM200,000 from an equipment manufacturer. Equipment
1 was transported and installed on the same day of purchase. Transportation costs
involved amounted to RM1,000, while the insurance against damage for Equipment 1
while being transported to the business premise at Nilam Industrial Park amounted to
RM600. Fruity had to pay RM7,400 to the vendor to install Equipment 1 at its premise.
Assume that the equipment can be used for years and the salvage value is estimated to
be RM10,000.
Equipment 2 was bought on 1 February 2014 for RM150,000 to cater for the rapidly
growing demand from Fruity's customers. Estimated useful life for Equipment 2 is 10
years from the date of purchase with the estimated salvage value to be 10% of the cost.
All payments were made by cheque except for the equipment bought on 1 February
2014 which was partly [paid by cheque of RM50,000 and partly by a loan from Karisma
Bank. Fruity uses the straight-line method for calculating depreciation. The depreciation
expense to be apportioned on the basis of one month's ownership requires one month's
depreciation expense. The company's financial year ends on 31 December each year.
Required:
Prepare the following:
(a) Journal entries to record the acquisition of the assets in 2013 and 2014.
(b) Equipment account and accumulated depreciation of equipment account for the year
2013 and 2014.
4. Below are the machinery bought buy Budweiser using cheque from year 2018 to 2020.
Date of Purchase
1 January 2018
1 March 2018
Cost (RM)
Machine AA
20,000
Machine BB
50,000
Machine DD
1 November 2018
10,000
Machine EE
1 May 2020
8,000
Depreciation is over ten years, using the straight line method at annual depreciation rate
of 8%. Depreciation policy states that full depreciation is made on non-current assets
owned for more than six months in a financial year.
Required:
Prepare:
(a) The journal entries for the above transaction
(b) The Machinery Account
(c) The Depreciation Account
(d) The provision for Depreciation Account
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