On 30 November 2017 a finishing machine was sold. Its capital cost was $25,000 and accumulated depreciation was $13,000 at date of sale. The machine had been depreciated since purchase at 22.5% pa using the straight line method. The machine was sold on credit to Jake Strong for $14,300 (including GST) with the purchaser paying a $1,000 deposit. Balance date is 30 June. Required: (a) (b) Record General Journal entries to account for the sale of the finishing machine and post to the relevant ledger accounts. Transfer the profit or loss on disposal to the Profit and Loss account at 30 June.
On 30 November 2017 a finishing machine was sold. Its capital cost was $25,000 and accumulated depreciation was $13,000 at date of sale. The machine had been depreciated since purchase at 22.5% pa using the straight line method. The machine was sold on credit to Jake Strong for $14,300 (including GST) with the purchaser paying a $1,000 deposit. Balance date is 30 June. Required: (a) (b) Record General Journal entries to account for the sale of the finishing machine and post to the relevant ledger accounts. Transfer the profit or loss on disposal to the Profit and Loss account at 30 June.
Chapter1: Financial Statements And Business Decisions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:23. Asset sold on credit (including GST) and purchaser pays deposit.
On 30 November 2017 a finishing machine was sold. Its capital cost was $25,000 and accumulated
depreciation was $13,000 at date of sale. The machine had been depreciated since purchase at
22.5% pa using the straight line method. The machine was sold on credit to Jake Strong for
$14,300 (including GST) with the purchaser paying a $1,000 deposit. Balance date is 30 June.
Required: (a) Record General Journal entries to account for the sale of the finishing machine
and post to the relevant ledger accounts.
(b) Transfer the profit or loss on disposal to the Profit and Loss account at 30 June.
General Journal
Date
Details
Debit
GJ1
Credit
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