Question

On 15 March 2012, a machinery which was originally bought on 30th July 2010 for 120,000 was sold for Q5. The following information is available from the records of a Sole trader 1 Jan 2012 Machinery at cost 340,000 Provision for Depreciation 150,000 Additional Information: 1. On 15th Jan 2012, new machinery was bought for 70,000 by Cheque. 68,000 cash. Depreciations is calculated at 25% per annum, using straight line method. Depreciation charged for full in the year of purchase and none in the year of disposal. Required: For each of the parts above, Prepare the following T. Accounts for the year ended 31" Dec 2012: a) Machinery Account b) Provision for Depreciation Accounts c) Disposal Account d) Prepare journal Entries to record the disposal of machinery.

A) Financial Statements
B) Machinery Transactions
C) Depreciation Management
D) Sole Trader Accounting

Answer 1

To prepare the T. Accounts for the year ended December 31, 2012, you will need to consider the transactions related to the machinery and depreciation. For the Machinery Account, there are transactions for the purchase, depreciation, and disposal of machinery. The Provision for Depreciation Account shows the provision for depreciation and the balance carried forward. The Disposal Account traces the disposal of the machinery. Finally, the journal entries record the disposal of machinery.

Step-by-step explanation:

To prepare the T. Accounts for the year ended December 31, 2012, we will need to consider the transactions related to the machinery and depreciation.

a) Machinery Account:

DateParticularsAmount30 Jul 2010By Bank (Purchase)120,00015 Jan 2012By Bank (Purchase)70,00031 Dec 2012To Depreciation28,25015 Mar 2012By Disposal120,00031 Dec 2012By Balance c/f41,750

b) Provision for Depreciation Account:

DateParticularsAmount31 Dec 2012To Depreciation28,25031 Dec 2012By Balance c/f121,750

c) Disposal Account:

DateParticularsAmount15 Mar 2012By Machinery120,00015 Mar 2012To Disposal515 Mar 2012To Balance c/f120,005

d) Journal Entries to record the disposal of machinery:

• Debit - Disposal
• Credit - Machinery
• Credit - Accumulated Depreciation

A) The subject of this question is Business, and the grade is High School.