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OReilly Pty Ltd purchased a motor vehicle for use in the business on 31 March this year for $42,000 plus GST. In accordance with the
O’Reilly Pty Ltd purchased a motor vehicle for use in the business on 31 March this year for $42,000 plus GST. In accordance with the firm’s policies and procedures, the accountant believes the cost of the motor vehicle should be allocated equally over its expected useful life of 5 years. It is anticipated that the motor vehicle would have a residual value of $10,000 plus GST. Assuming the balance date is 30 June. |
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Straight Line depreciation |
On 31 December, a finishing machine was sold. Accumulated depreciation to 30 June was $10,000. The depreciation for 6 months ended 31 December was $3,000. Its capital cost was $25,000 and accumulated depreciation was $13,000 at date of sale. The machine was sold for cash to Jake Strong for $14,300 (including GST). Balance date is 30 June. |
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General Journal – O’Reilly Pty Ltd | |||
Date | Details | Debit | Credit |
30/11/23 | |||
Transfer asset cost to Disposal Account | |||
30/11/23 | |||
Transfer asset accumulated depreciation to Disposal Account | |||
30/11/23 | |||
Sale of asset to Jake Strong | |||
30/11/23 | |||
Profit on disposal of asset | |||
30/6/23 | |||
Transfer Profit on disposal of asset to Profit and Loss account |
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Note: As the accumulated depreciation has been provided at the date of sale, no further depreciation entries are required, and the Depreciation ledger account should have no entries |
General Ledger Extract | |||||
---|---|---|---|---|---|
Date | Details | Folio | Debit | Credit | Balance |
Machinery | |||||
30/11/XX | Balance | N/A | 620,000 DR | ||
N/A | |||||
Accumulated Depreciation | |||||
30/11/XX | Balance | N/A | 280,000 CR | ||
N/A | |||||
Bank | |||||
30/11/XX | Balance | N/A | 20,000 DR | ||
N/A | |||||
GST Collected | |||||
30/11/XX | N/A | ||||
N/A | |||||
Depreciation | |||||
30/11/XX | N/A | ||||
N/A | |||||
Disposal | |||||
30/11/XX | N/A | ||||
N/A | |||||
N/A | |||||
Profit on Disposal | |||||
30/11/XX | N/A | ||||
30/06/XX | N/A |
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