BSBFIA401 Prepare financial reports - Assessment 3

On December 31, 2017, Jim Jones purchased a Machine on credit for $330,000 ($300,000 + $30,000 GST). It had an expected useful life of four years and an expected residual of $22,000 ($20,000 + $2,000GST)

Required

1. Using the Straight line method of depreciation, complete the depreciation worksheet for the financial years ended June 30, 2018, 2019, 2020, 2021, 2022. (6 marks)
2. Jim Jones has decided to use the Reducing Balance Method to depreciate the Machine. For all further calculations use the Reducing Balance Method.
   Complete the depreciation worksheet for the financial years ended June 30, 2018, 2019, 2020, to 28/2/2021 using the Reducing Balance Method. The asset was sold on the 28/2/2021 for $88,000 ($80,000 + $8,000 GST). The rate of depreciation is 30% p.a. (8 marks)
3. Using the information from Part (b), prepare for the period December 31, 2017 to June 30, 2019, the following general ledger accounts:
    Machine account (2 marks)
    Accumulated Depreciation – Machine (2 marks)
4. Prepare appropriate general journal entries to record the sale of the Machine on 28 February 2021 for $88,000 cash ($80,000 +$8,000 GST). (10 marks)

Note: You may choose to use a “Disposal a/c” as per your textbook chapter 12, or you can use the simplified disposal method as per Topic 1 on the OLS.