Selected transactions of Coromandel Ltd are given on the next page. The company uses straight-line depreciation and calculates depreciation expense to the nearest whole month.

Question

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Selected transactions of Coromandel Ltd are given on the next page. The company uses straight-line depreciation and calculates depreciation expense to the nearest whole month.

2015 Jan.     4 April            10

Purchased from Brampton Ltd a bottle washer (Serial No. 17538X) for $44 000 cash (net of GST). The useful life of the machine is 5 years and its residual value is expected to be $8000. Purchased from Granada Ltd a dryer (Serial No. PY43121) for $39 000 cash (net of GST). The machine has a useful life of 6 years and a residual value of $9000.

Required

A. Prepare journal entries to record the purchase of the assets and to record depreciation expense on 30 June 2015 and 2016, the end of the company’s reporting periods.

B. Open a Machinery account (No. 230) and an Accumulated Depreciation-Machinery account (No. 231), and prepare subsidiary property and plant records for the two assets. Post the journal entries to the general ledger accounts and to the subsidiary property and plant records.