NAME......................................................

On 15 June 20x1, Large Mart has finished building a new machine for its own factory in Armidale. Large Mart incurred the following expenditures when building the machine (all payments are made on 15 June 20x1):

Components $35,000 Engineering Fees $600 Wages for Large Mart Employees $500 Total Payments $36,100

The building of the machine took 3 month, and Large Mart used a bank loan to make the necessary payments during the building process. At the end of the 3 month (on 15 June 20x1), Large Mart paid $500 interest to the bank.

Required:

1. a) Determine whether or not the payments for components, engineering fees, wages for Large Mart Employees, and interest are part of cost of machine AND provide a detailed explanation for your decisions (3 marks)
2. b) Calculate the total cost of the machine AND explain your calculation (1 mark)
3. c)ProvidealljournalentriesthatarenecessaryinthebooksofLargeMarttoaccountforthebuildingofthemachineandthepaymentofinteresttothebank.(2marks)

NAME

On 21 June 20x1, the Large Mart store in Armidale purchased a new company car for its customer service department (called the Nerd Herd). The car costs $60,000 and was purchased from Coffs Harbour Car Sales. When purchasing the car, Large Mart took out a 1 year comprehensive insurance policy with NRMA insurance for a cost of $2,000. The invoice for the car allows Large Mart to deduct 5% of the cost of the car if the invoice is paid within 10 days.

On 23 July 20x1, Large Mart paid the invoice from the Coffs Harbour Car Sales (after deducting 5% discount) as well as the invoice for the insurance of the car.

Required:

1. a) Determine if the amount paid for the comprehensive insurance of the car and the discount received from Coffs Harbour Car Sales influence the total cost of the car in Large Marts accounting system AND explain your decision. (3 marks)
2. b) Provide all journal entries that are necessary in the books of Large Mart to account for the purchase of the car, and the payment of the invoice from Coffs Harbour Car Sales. (3 marks)