Question
Question 3 (6 marks) On 21 June 20x1, the Large Mart store in Armidale ordered a new company car for its customer service department (called
Question 3 (6 marks) On 21 June 20x1, the Large Mart store in Armidale ordered a new company car for its customer service department (called the Nerd Herd) from a car dealer in Brisbane for $30,000. The car was delivered to Large Mart in Armidale on 28 June 20x1, and the delivery company left a delivery invoice of $500 when delivering the car. The invoices for the car and the delivery of the car were paid via bank transfer on 29 June 20x1. On 28 June 20x1, Large Mart also signed a comprehensive 12 month insurance contract for the car at a cost of $2,500. The cost of the insurance was paid on 28 June 20x1. Large Mart will use the new car for 6 years and depreciate the car using the straight-line depreciation. Large Mart expects that the car will have a residual value of $1,000 at the end of its useful life. Required: A) Explain if the delivery fee for the car and the cost of the comprehensive insurance are part of the cost of the car when the car is first recognised as an asset in the Large Mart accounts. (2 marks) B) Provide all journal entries that are necessary in the books of Large Mart to account for the purchase and delivery of the car during June 20x1. (1 mark) C) Provide all journal entries that are necessary in the books of Large Mart to account for the depreciation of the car for the month of June 20x1, AND provide a detailed outline of your calculations. (1.5 marks) D) State the day on which the depreciation of the car commences, AND provide a detailed explanation why the deprecation of the car start on that day.
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