On the 1 August 2017 Xu Ltd purchased steel cutting equipment for their manufacturing plant at a cost of $100,000 from Gao Ltd. It cost $1,500 to have the equipment delivered to the factory by Nurmalisa Transports and another $1,000 for installation and testing. The driver delivering the equipment was caught speeding and was fined $220. The driver also crashed into a roller door at Xu Ltd’s premises which cost Xu $600 to repair. Gao and Nurmalisa Transport were paid cash at the time of purchase. All costs are excluding 10% GST. At that time it was expected that the equipment will have an estimated useful life of 1,000,000 cuts and after that use it will be able to be sold for $10,000. From purchase up until the 30 June 2018 it was used to make 150,000 cuts while in 2019 it was used to make 190,000 cuts. On the 1 July 2019 Xu decided to revalue the equipment. At that time the fair value is considered to be $80,000 and it is estimated that it will be good for doing another 750,000 cuts at which time its residual value will be $5,000. For the year ending 30 June 2020 the equipment was used to make 120,000 cuts. Required: Prepare all necessary General Journal entries associated with the equipment in the books of Xu Ltd. up until 30 June 2020.
On the 1 August 2017 Xu Ltd purchased steel cutting equipment for their manufacturing plant
at a cost of $100,000 from Gao Ltd. It cost $1,500 to have the equipment delivered to the
factory by Nurmalisa Transports and another $1,000 for installation and testing. The driver
delivering the equipment was caught speeding and was fined $220. The driver also crashed
into a roller door at Xu Ltd’s premises which cost Xu $600 to repair. Gao and Nurmalisa
Transport were paid cash at the time of purchase. All costs are excluding 10% GST.
At that time it was expected that the equipment will have an estimated useful life of 1,000,000
cuts and after that use it will be able to be sold for $10,000. From purchase up until the 30
June 2018 it was used to make 150,000 cuts while in 2019 it was used to make 190,000 cuts.
On the 1 July 2019 Xu decided to revalue the equipment. At that time the fair value is
considered to be $80,000 and it is estimated that it will be good for doing another 750,000 cuts
at which time its residual value will be $5,000. For the year ending 30 June 2020 the
equipment was used to make 120,000 cuts.
Required:
Prepare all necessary General
Xu Ltd. up until 30 June 2020.
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