Question
B. Brain and Smart Ltd completed the following transactions during 2019 and 2020. The financial year for the company ends on 30 June each year.
B. Brain and Smart Ltd completed the following transactions during 2019 and 2020. The financial year for the company ends on 30 June each year. Required: Prepare journal entries as necessary for each of the transactions below including any adjusting entries at 30th June 2020 (narrations are not required). 10 marks
2020 1 Jan Purchased new Land and Building for $5,250,000 from Custom Credit Ltd. The value of the Land was 40%. Financing arrangements included payment of an initial deposit of 10% of the purchase price and the signing of a 7.5% p.a. Mortgage. At 30th June the quarterly payment, April to June of $168,962 (including interest of $13,126), remains unpaid. Record the asset purchase (ignore GST), and any adjusting entry at 30th June. 23 Apr The Company paid warranty costs of $450 in cash to make good warranty conditions on a product sold in 2017. The company has a Provision for Warranty Costs account. 6 May Issued a 7% 60 day promissory note to Carbon Ltd in settlement of an account for $14000 for goods purchased from them in September last year. 26 June Purchased $14300 worth of inventory (GST included) from AZD Ltd on credit terms of 2/10, n/30 (record GST) 30th June The GST Control account of the company has GST Paid of $4200 and GST Collected of $5400 during the period April to June. Make the entry for the settlement of GST with the Australian Tax Office.
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