Accounting

  1. 1 (Max. Marks: 30)

Barbari Ltd acquires a bus for a list price of $330,000 (GST inclusive) on

1.1.2005 by paying $260,000 and trading in an older bus which is on the books

at a historical cost of $250,000 & an accumulated depreciation of $190,000.

The new bus is expected to have a useful life of six years, after which it will be

donated to Red Cross.

On January 1 2007, the bus is revalued to $250,000 and its useful life is

reassessed: it is expected, at that date, to have a remaining useful life of five

years.

On 1 July 2008, the bus is unexpectedly sold for $105,000

Required:

Provide journal entries in accordance with AASB 116 to record

  1. Purchase of new bus on 1 January 2005 Marks :10
  2. the revaluation on 1 January 2007 &Marks : 8
  3. the subsequent sale on 1 July 2008. Marks: 12

Note: Barbari Ltd used accelerated depreciation method. The accelerated

depreciation rate is 1.2 times the straight line rate. Barbari Ltd is registered for

GST.

 

 

 

Q.2 (Max Marks: 15)

Consider the following March transactions for Indoor Décor & Furnishing

Store:

March 3 Completed interior decoration job & received $2,900 from a

client

March 6 Purchased 120 sofas on credit for $28,800, plus freight in of

$1,800

March 14 Sold 65 sofas to Ancora Hotels Ltd for $425 each on credit 1/10,

net 30.

March 18 Offered consultancy services to a client for interior decoration

for a fee of $1,700 on credit.

March 21 Purchased 50 table lamps for $1,250 total

March 24 Ancora Hotels settled their account in full.

March 28 Sold 30 table lamps for cash, $875

March 31 Posted depreciation of $150 on plant & equipment. The physical

count of inventory recorded 54 sofas & 20 table lamps. Provided

for bad debt expenses for the month of March.

Required:

Record the above transactions for Indoor Décor & Furnishing Store. (Ignore

GST)

Note: Indoor Décor & Furnishing Store follows perpetual inventory system &

provides for bad debt expenses at 2% of credit sales.

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