On 1 st july 2015 the entity reviewed the recoverable

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depreciate their assets. On 1 st July 2015 the entity reviewed the recoverable amount of the equipment to be a value of $120,000. The revised useful life was six (6) years and residual value was estimated at $15,000. (a) Prepare the general journal entries in relation to the change in value of the equipment on 1 st July 2015 . (Narrations required.) Classic Designs Pty. Ltd. – General Journal Date Details DR CR (2 marks) 8 Downloaded by Ying ying ([email protected]) lOMoARcPSD|3734561
(b) Record the depreciation entries for 30 June 2016. Classic Designs Pty. Ltd. – General Journal Date Details DR CR (2 marks) (c) Classic Designs Pty Ltd provided the following details relating to the old printer. It had been purchased for $26,000 (Ignore GST) and straight line depreciation of $3,200 was applied each year. It had a carrying amount of $10,400 as at 30 th June 2014. Classic Designs Pty Ltd sold the old printer on the 3oth June 2014 for $8,800. Required: Complete the ledger account to record the sale of the old printer as at 30the June 2014. Sale of Printer Date Cross reference $ Date Cross reference $ Working space: (3 marks) (d) Classic Designs Pty Ltd depreciated the old printer using the straight line method. As the new accountant for Classic Designs Pty Ltd, would you continue to use the straight-line method for the new printer? Discuss. (3 marks) 9 Downloaded by Ying ying ([email protected]) lOMoARcPSD|3734561
(e) Assuming Classic Designs Pty. Ltd. grows over time, under what conditions would Classic Designs Pty. Ltd. become Classic Designs Ltd.? (2 marks) Question Six: 2 + 2 + 3 + 3 + 2 = 12 marks QUESTION 7 8 MARKS John’s Ltd. entered into a finance leasing contract of an item of equipment on 1 July 2016 for a four year term at 10% interest rate. The cost of the use of the equipment has been assessed at a fair value of $50 000. The lease payment schedule relating to the leased equipment is shown below: (a) Show the general journal entry to record the leasing arrangement on 1 July 2016. (NOTE: Include narrations). John’s Ltd– General Journal Date Details DR CR (2 marks) 10 Downloaded by Ying ying ([email protected]) lOMoARcPSD|3734561
(b) Show the general journal entries required for the year ended 30 June 2017. (NOTE: narrations are NOT required for this part.) John’s Ltd– General Journal Date Details DR CR (4 marks) (c) Show the Liability section of the Statement of Financial Position as at 30 June 2017. (2 marks) Question Seven: 2 + 4 + 2 = 8 marks 11 Downloaded by Ying ying ([email protected]) lOMoARcPSD|3734561
QUESTION 8 21 MARKS Pink Apple Ltd presents the following information: Statement of Financial Position as at 30 June 2016 30 June 2016 $’000 30 June 2015 $’000 Current Assets Cash 21,020 40 Term Deposit 695 595 Accounts Receivable 1,100 880 Allowance for Doubtful Debts (55) (45) Inventories 810 760 Prepaid expenses 125 95 Total Current Assets 23,695 2,325 Non-Current Assets Motor vehicles 1,500 2,000 Accumulated depreciation of MV (755) (600) Warehouse equipment 4,000 2,500 Accumulated depreciation of WE (550) (300) Land and Buildings 201,615 201,615 Accumulated depreciation of Buildings (85,635) (80,000) Total Non-Current Assets 120,175 125,215 Total Assets 143,870 127,540 Current Liabilities Accounts Payable 402 550 Accrued expenses 60 80 Income tax payable 210 160 Bank bill payable 390 - Total Current Liabilities 1,062

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