7.4 At 31 December 20X3 the trial balance of Damp Ltd contained the following balances in repect of motor vehicles:

Debit Credit

£ £

Motor vehicles at cost 127,000 Accumulated depreciation at 1 January 20X3 76,000 Disposal of motor vehicles 1,600 You ascertain that during 20X3 the following occurred:

1 A delivery van, which was fully depreciated and had cost £2,000, was scrapped. No proceeds were received.

2 A car that cost £5,000, on which accumulated depreciation was £3,000, had been traded in for a new model with a full cost of £8,000. A trade-in allowance of £1,500 was received, and only the net cost of the new car, £6,500, has been entered in the books.

3 A car that cost £4,000 and had a written-down value of £1,250 was sold for £1,600 (credited to the disposals account).
4 A delivery van was sold for £2,500. This vehicle had cost £10,000 and a loss of £750 was made on its sale. The proceeds have been credited to the fixed asset account.
5 The depreciation charge for the year is £25,000.

(a) Prepare the motor vehicles at cost account, motor vehicles accumulated depreciation account and disposal of motor vehicles account for 20X3 to show the effect of the above information and the transfer to the profit and loss account.

(b) Show the extract for motor vehicles that would appear in the company’s balance sheet at 31 December 20X3.