Question text

Salam Food Manufacturing has the following asset in the account as at 30 June 2019.

• Factory Building360 000
• Accumulated Depreciation 30000

Additional information:

• The building was purchased on 1 January 2017. Its estimated useful life is 25 years and it has an estimated residual value of $60 000.
• On 15 January 2020, the owner decided to extend the factory building by adding a small warehouse. The extension work started on 31 March and was completed by 30 Aprilat a cost of $100 000. The extension is expected to increase the remaining useful life of the building to 30 years and increase its residual value by $10000.
• Depreciation is charged to the nearest month and all figures are rounded to the nearest dollar.

Required:Prepare general journal entries to record the transactions and events for the reporting period ended 30 June 2020.

ANSWER

30 April 2020

Debit

Credit