Northeast Drycleaning Service Ltd has the following accounts on 31 May 2007:

On 31 December 2007, half the machinery and plant was sold for £190,000 cash.
The disposed machinery and plant was originally purchased on 1 January 2002. New machinery was purchased for cash on 20 April 2008 for £900,000. The machinery and plant are depreciated at 10 percent on the straight-line method. The business’s policy is to charge a full year’s depreciation in the year of acquisition and in the year of disposal, i.e. no allowance is made for parts of the year.
Required 1 Show the double-entries in Northeast Drycleaning Service Ltd relating to machinery and plant, depreciation expense, provision for depreciation, and disposal accounts.
Use the blank T-accounts provided below.
2 Show the relevant balance sheet extract on 31 May 2008.

Transcribed Image Text:

Machinery and plant Provision for depreciation on motor vehicles 500,000 400,000