Question
Question 6 ASL Woollen Mills purchased a weaving machine on 2 July 2018 with a list price of $156,090. Additional costs associated with the purchase
Question 6
ASL Woollen Mills purchased a weaving machine on 2 July 2018 with a list price of $156,090. Additional costs associated with the purchase of the machine included freight $5,610, insurance in transit $737. An additional $2,530 was paid to repair damage caused during installation of the weaving machine. ASL Woollen Mills also signed a 12-month maintenance agreement for $3,300 which was paid in cash. All costs are shown as GST inclusive.
ASL paid $60,000 cash and obtaining a 5-year loan for the balance of the acquisition cost of the weaving machine.
The effective useful life of the weaving machine is expected to be 8 years with a residual value of $15.000
ASL Woollen Mills is registered for GST and has a financial year ending 30 June.
On 30 June 2020 ASL Woollen Mills replaced a major part of the weaving machine costing $15, 400 (GST inclusive). The carrying value of the part replaced was $8,250. It is estimated that the effective life of the weaving machine will be extended by 4 years.
Required:
Prepare general journal entries to record the following (Narrations are not required):
-
Purchase of the printing machine on 2 February 2018.
(9 marks)
-
Depreciation of the weaving machine for the year ending 30 June 2019.
(2 marks)
-
Overhaul of the weaving machine on 30 June 2020
(7 marks)
-
Sale of the weaving machine on 30 December 2020.
(12 marks)
(total: 9 + 2 + 7 + 12 = 30 marks)
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