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Belle Food Production Ltd purchased a new canning machine on 1 January 20zu for $44,000 (excluding GST) on credit. At that time the canning machine
Belle Food Production Ltd purchased a new canning machine on 1 January 20zu for $44,000 (excluding GST) on credit. At that time the canning machine was estimated to have a useful life of 5 years and the residual value to be $2,000. Belle Food Production Ltd uses the straight-line method of depreciation. The business pays a six monthly fee to a maintenance company (paid on 2 January and 2 July each year) to service the canning machine to avoid beak downs at an annual cost of $3,000 (excluding GST). The service fee is paid in cash at the time of the service. On 1 July 2023, the canning machine underwent a major overhaul at a cost of $18,000 (excluding GST). Parts replaced during the overhaul had a carrying amount of $800. The new residual value was assessed be $1,000, and the overhaul is estimated to extend the original estimated useful life by a further 4 years. Notes: You may ignore GST for this question REQUIRED a. Prepare the journal entry to record the purchase of the canning machine on 1 January 2020. (1 Mark) b. Prepare the journal entry to record the service on the canning machine on 2 July
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