At the end of Leonard Ltd's financial year, 30 une 2018, the following items (shown in a), b), and c)) must still be resolved. Assume Leonard Ltd has an annual accounting period and that no adjusting entries have been prepared. Regarding depreciation, if a purchased depreciable asset is available for use on the 15 of the month or before, the company depreciates for the entire month; if available for use after the 15, then depreciation begins the first of the following month. For al its PP&E, Leonard Ltd applies the Historical Cost model. Ignore GST a) On 7 September 2017, Leonard Ltd purchased a used machine for $48,000. The cost was debited to the Machinery account. Prior to use, additional cash expenditures were made for painting and repairing the machine, 4,200, and installing and testing the machine, $3,000. These additional expenditures were debited to Repairs and Maintenance Expense. The repairs and installation were completed on 10 October 2017, after which the machine was available for use for the first time. The useful life was estimated at 5 years from the date of availability, and the residual value estimated at $4,000. Leonard Ltd will use the declining balance method of depreciation, calculated at twice the straight-line rate Required: Prepare the correcting and/or adjusting journal entries for the financial year b) A building and land were purchased on 21 December 2017 for $900,000, and the entire amount was debited to the Land account. The appraised values of the building and land were $400,000 and $800,000, respectively and both were placed in operation immediately. The building has a useful life of 40 years with no residual value. Leonard Ltd for use for the first time. The usefulTife was estimated at 5 years from the date of availability, and the residual value estimated at $4,000. Leonard Ltd will use the declining balance method of depreciation, calculated at twice the straight-line rate Required: Prepare the correcting and/or adjusting journal entries for the financial year. b) A building and land were purchased on 21 December 2017 for $900,000, and the entire amount was debited to the Land account. The appraised values of the building and land were $400,000 and $800,000, respectively, and both were placed in operation immediately. The building has a useful life of 40 years with no residual value. Leonard Ltd uses straight-line depreciation for buildings Required: Prepare the correcting and/or adjusting journal entries for the financial year. c) On 1 March 2018, Leonard Ltd purchased a new truck, paying cash of $60,000 and financing the remaining $30,000 with the truck dealer; thus, the bookkeeper debited Delivery Vehicle for $90,000 and credited Cash and Loan Payable for the correct respective amounts. The $30,000 is due in 12 months, but the interest, calculated at 10% per annum, is payable every three months. The first interest payment took place on 1 June 2018, and was journalised by debiting Delivery Vehicle and crediting Cash for $750. The truck will be depreciated using the units of production method, over an estimated 100,000 kilometres and a residual value of $20,000. From 1 March 2018 until the end of the financial year, the truck was driven 8,000 kilometres Required: Prepare the correcting and/or adjusting journal entries for the financial year
