Question 3 50 Marks Tammy Limited, as well as all of Tammy Limited's suppliers, are registered as vendors in accordance with the VAT-Act. Tammy Limited's current reporting period ends on 31 December 2021. On 22 April 2021, Tammy Limited entered into a purchase contract with SA Supplier for the purchase of a machine. The following emanates from the purchase contract. 1. The cost price of the machine is R1 725000 (including VAT). 2. On 25 May 2021, the machine was loaded onto a special truck at the premises of SA Supplier. On this date, the right of ownership of the machine transferred to Tammy Limited. The invoice for the machine to the amount of R1 725000 (including VAT) was also delivered to Tammy Limited on this day and is, in accordance with the stipulations of the contract, payable on 24 June 2021. 3. The machine was transported to the premises of Tammy Limited by TT Transport using the special truck, where it was offloaded on 2 June 2021 on the stand allocated for the machine. The invoice for transport costs to the amount of R55 200 (including VAT) was also received from TT Transport on this date and is, in accordance with the conditions of the invoice, payable on 30 June 2021. 4. On 29 June 2021, the installation of the machine was completed by an external service provider. The cost associated with the installation, namely R207 000 (including VAT) was paid on this date by means of an EFT (electronic fund transfer). 5. As part of the installation order, the external service provider provided training to six operators of Tammy Limited. The external service provider's cost associated with the training amounted to R17 250 (including VAT). The gross remuneration of the six operators during the period of training was R13 800 . 6. On 30 June 2021 , the health inspector of the local authority inspected the machine and confirmed that everything was in order. There are no costs in this regard to Tammy Limited. 7. On 1 July 2021 the machine was available for use in the manner intended by the owner. 8. As from 1 July 2021 to 31 July 2021 the employees of Tammy Limited, who are members of the Metal Workers Union, went on strike. Consequently, the machine was put into service only on 1 August 2021. 9. The estimated useful life of the machine is six years with a residual value of R48 000 . The depreciation expense has to be recognised in accordance with the straightline method. 10. Tammy had a trade receivable balance of R1 500000 before the SA Suppliers transaction as at 1 January 2021. 11. The management of Tammy Limited agreed to pay 50% of all their trade payables on the 31 of December 2021. Required: a) Define the accrual basis of accounting and explain the practical implication of accrual accounting. (4 Marks) b) Calculate the cost price of the new machine acquired by Tammy Limited. (11 Marks) Note: - Clearly show all calculations. - Where necessary, indicate if the amount will not be included in the cost price c) Provide the necessary journal entry to recognise the new machine acquired in the accounting records (general journals) of Tammy Limited for the year ended 31 December 2021. (20 Marks) d) Calculate the depreciation and carrying amount of the machine on 31 December 2021. (7 Marks) e) Provide the necessary journal entry to recognise the depreciation calculated above. (3 Marks) Note: - Clearly show all calculations. (f) Provide a note for trade and other payables of Tammy Limited for the year ended 31 December 2021