Presented below are selected transactions for Rangers Ltd during the year 2021. 1 Jan. Sold equipment that was purchased on 1 July 2017. The equipment which cost $36,000 had a useful life of 10 years with no residual value. The equipment was sold for $18,000 on cash. 1 April Purchased motor vehicle on cash at $60,000. The motor vehicle is expected to have 10 years useful life with no residual value. 30 June Sold a machinery for $30,600 on cash that was purchased on 1 July 2015. The machinery cost $64,800 and was depreciated based on a 8-year useful life with a $10,800 residual value. 31 Dec. Sold land on cash for $800,000. The land was bought at $300,000 three years ago. Required: a) Ignore GST. Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of, where applicable. Rangers Ltd uses straight-line depreciation method for all its depreciable assets. The reporting period ends on 31 December. b) Prepare the journal entry to record Depreciation Expense for year ending 31/12/2021 for motor vehicle.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Presented below are selected transactions for Rangers Ltd during the year 2021.
|
1 Jan. |
Sold equipment that was purchased on 1 July 2017. The equipment which cost $36,000 had a useful life of 10 years with no residual value. The equipment was sold for $18,000 on cash. |
|
1 April |
Purchased motor vehicle on cash at $60,000. The motor vehicle is expected to have 10 years useful life with no residual value. |
|
30 June |
Sold a machinery for $30,600 on cash that was purchased on 1 July 2015. The machinery cost $64,800 and was |
|
31 Dec. |
Sold land on cash for $800,000. The land was bought at $300,000 three years ago. |
Required:
a) Ignore GST. Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of, where applicable. Rangers Ltd uses
b) Prepare the
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