Transaction 1:

Large Mart has purchased a warehouse from Buy-More Ltd. The contract for the purchase was signed on the 1 April 201X and Large Mart took possession of the warehouse on that day. One important reason why this warehouse was purchased is that no changes to the property are required. As a result Large Mart starts to use the warehouse on the 1 April 201X. For detailed information about purchase contract (see invoice from Buy-More Ltd)

Additional information about the purchase of the warehouse:

One week before the purchase was completed, Large Mart received a professional valuation for the land, the building, the shelving in the warehouse and the computer system used for the management of the warehouse. The valuation showed that the fair value of the land was equal to $600,000, that the fair value of the building was equal to $500,000, and that the shelving and the computer system had fair values equal to $300,000 and $150,000, respectively.

The company that conducted the valuations has sent invoice for its services (see invoice from Valuations Made Easy Pty Ltd).

Large Mart estimates that the non-current assets that were purchased in the transaction outlined above have the following useful lives:

o Warehouse: 30 years

o Warehouse Shelving: 15 years

o Computer for Warehouse Management: 3 years

The Warehouse and the Computer System that were purchased in the outlined transaction are not expected to have any residual values at the end of their useful lives. However, the warehouse shelving is expected to have a residual value of $5,000 at the end of its useful life.

Required:

1. Provide all journal entries that are necessary to account for the purchase transaction described above, and remember to include the asset valuations costs in your calculations

2. Prepare a depreciation schedule for all depreciable assets that were purchased in the outlined transaction (use the depreciation schedule provided in the supporting documents section to complete this task)

3. Provide all journal entries that are necessary to account for the depreciation of all depreciable assets that were purchased in the outlined transaction for the month ending 30 April 201X.

4. Provide all journal entries that are required to account for the payment of invoices that are associated with this transaction.

a. The payment to Valuations Made Easy is made on the 3 April 201X

b. The payment to Buy-More Ltd is made on the due date provided on the invoice

Transaction 2:

On the 11 April 201X, Large Mart has paid the Australian Subsidiary of an American company called Bpple $100,000 for the right to sell Bpple products at the University of New England (UNE). This agreement states that Bpple will not allow any other shop at UNE to sell Bpple products for the next two years. The agreement is signed on the 11 April 201X and Large Mart transfers the required money to Bpple on the same day.

Required:

1. Provide all journal entries that are necessary to account for the purchase and payment of the distribution right for Bpple Products

2. Prepare an amortisation schedule for the purchased distribution right (use the depreciation schedule provided in the supporting documents section to complete this task)

3. Provide all journal entries that are necessary to account for the amortisation of the distribution right for the month ending 30 April 201X.

Transaction 3:

On the 15 April 201X, Large Mart received a shipment of office supplies. Attached to the shipment was the following invoice (see invoice from Office Works).

Required:

1. Provide all journal entries that are necessary to account for the receipt of the invoice (and the office supplies) as well as the payment of the invoice. The invoice is paid on the last day on which the early payment discount of 5% applies

Transaction 4:

On the 21 April 201X Large Mart signs a 12 month rental contract for a new office in Armidale. Large Mart prepays the rent for the office for one year. The period for which rent is prepaid starts on the 21 April 201X and ends on the 20 April the following year. The total prepayment amounts to $120,000.

Required:

1. Provide all journal entries that are necessary to account for the prepayment of rent on the 21 April 201X

2. Provide all journal entries that are necessary to account for rent expenses for the month of April 201X

Transaction 5:

On the 30 April 201X, the office manager of Large Mart determines that office supplies with a value of $200 have been used in the month of April.

Required

1. Provide all journal entries that are necessary to account for the use of office supplies during the month of April 201X.

Transaction 6:

On the 1 May 201X, Large Mart decides to sell the computer system that was purchased together with the warehouse. The purchaser pays Large Mart a total of $95,000. The sales contract is signed on the 1 May 201X and the computer system is picked up by the purchaser on the same day. In addition, the required payment is deposited into the bank account of Large Mart on the 1 May 201X.

Required:

1. Provide all journal entries that are necessary to account for the sale of the computer system (remember that the computer system is a non-current asset)

2. Adjust the depreciation schedule to reflect the sale of the computer system

Transaction 7:

On 1 May 201X, Large Mart asks Valuations Made Easy Pty Ltd to determine the fair value of the warehouse and the land on which the warehouse is located. This valuation became necessary because the price of land in Armidale (where the warehouse is located) has increased substantially during the month of April 201X.

Because Large Mart is a good customer of Valuations Made Easy Pty Ltd, the new valuations are finalised on the same day (1 May 201X) and emailed to the accounting department of Large Mart. The email contains the following information:

To whom this may concern,

Valuations Made Easy Pty Ltd was asked to determine the fair value of the warehouse (and land) located at 23 Storage Road, Armidale NSW. After inspecting the warehouse and all associated documentations, we arrived at the following valuations.

1) Land (located at 23 Storage Road, Armidale NSW) = $600,000

2) Building (located at 23 Storage Road, Armidale NSW) = $400,000

Based on this email, the managers of Large Mart decide to change the accounting policies used to determine the value of its land and buildings from the cost method to the revaluation method. This decision is made on the 1 May 201X.

Required:

1. Determine if the accounting policy change described above will influence the value of the land and the building in the statement of financial position of Large Mart.

2. Provide all journal entries that are necessary to account for the change in accounting policies (the revaluation of the land and the building) described above.

3. Determine any changes that are necessary in the depreciation schedule due to the conducted revaluations and update the depreciation schedule for May 201X accordingly.

Transaction 8:

Post all information that you have recorded in the General Journal to the General Ledger. Do not forget to record posting references in the General Journal after you have completed your postings!

Large Mart Depreciation/Amortisation Schedule Depreciation Informati used for Account Numbers Straightline Depreci Declining Bal ce Depreciation IDB) PLEASE NOTE: Large Mart Calculates theDepreciatio age for the Declining Bala Usage D eciation (UD) Start Date for Depreciat ation Period Depreciation Method Depreciable Amo per Month D May (or at recognition date iflaterl (or at recagnition date iflater) Carryine amount 1 July Method as (100 asset) x 2