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Answers AA015 - Chapter 8

This document contains proposed answer schemes and journal entries for several accounting questions. Question 1 summarizes vehicle and office equipment accounts for 2005 and 2006, including balances carried forward and accumulated depreciation calculations. It also defines the difference between depreciation expenses and accumulated depreciation. Question 2 similarly summarizes vehicle and office equipment accounts, accumulated depreciation, and provides depreciation expense calculations for 2007. Question 3 summarizes buildings and equipment accounts for 2007, including a bank transaction, disposal, accumulated depreciation balances and calculations. Question 4 provides journal entries to record the disposal of machinery in 2008, acquisition of new scanner equipment, and the associated accumulated depreciation and loss/gain

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2K views5 pages

Answers AA015 - Chapter 8

This document contains proposed answer schemes and journal entries for several accounting questions. Question 1 summarizes vehicle and office equipment accounts for 2005 and 2006, including balances carried forward and accumulated depreciation calculations. It also defines the difference between depreciation expenses and accumulated depreciation. Question 2 similarly summarizes vehicle and office equipment accounts, accumulated depreciation, and provides depreciation expense calculations for 2007. Question 3 summarizes buildings and equipment accounts for 2007, including a bank transaction, disposal, accumulated depreciation balances and calculations. Question 4 provides journal entries to record the disposal of machinery in 2008, acquisition of new scanner equipment, and the associated accumulated depreciation and loss/gain

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nur athirah
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CHAPTER 8 - PROPOSED ANSWER SCHEME

QUESTION 1
i) a. Vehicle Account
Date Particular RM Date Particular RM
2005 2006
Aug 1 Bal b/f 200,000 Jan 31 Disposal 100,000
1 Bank 70,000 Jul 31 Bal c/f 250,000
Nov 1 Bank 80,000
350,000 350,000
Office Equipment Account
Date Particular RM Date Particular RM
2005 2006
Aug 1 Bal b/f 64,000 Jul 31 Bal c/f 89,000
Sept 15 Bank 20,000
2006
Jan 1 Bank 5,000
89,000 89,000
b. Accumulated Depreciation- Vehicle Account
Date Particular RM Date Particular RM
2006 2005
Jan 31 Disposal 60,000 Aug 1 Bal b/f 80,000
Jul 31 Bal c/f 70,000 2006
Jul 31 Depreciation Expenses 50,000
350,000 (250000 x 20%) 130,000
Accumulated Depreciation- Office Equipment Account
Date Particular RM Date Particular RM
2006 2005
Jul 31 Bal c/f 14,660 Aug 1 Bal b/f 6,400
2006
Jul 31 Depreciation Expenses 8,260
14,660 (89000-6400) x 10% 14,660
ii) Different between depreciation expenses and accumulated depreciation:
 Depreciation are expenses incurred in current accounting period.
 Accumulated depreciation is the amount of depreciation on fixed assets
during it’s useful life.
QUESTION 2
i) Vehicle Account
Date Particular RM Date Particular RM
2006 2007
Jul 1 Balance b/f 80,000 Jun 30 Bal c/f 270,000
Oct 9 Bank 85,000
2007
Apr 25 Bank 105,000
270,000 270,000
Office Equipment Account
Date Particular RM Date Particular RM
2006 2006
Jul 1 Bal b/f 50,000 Dec 25 Disposal 5,500
2007 2007
Mac 30 Bank 6,500 Jun 30 Bal c/f 55,880
June 15 Bank 4,880
61,380 61,380
Accumulated Depreciation- Vehicle Account
Date Particular RM Date Particular RM
2007 2006
Jun 30 Bal c/f 69,500 Jul 1 Bal b/f 37,250
2007
Jun 30 Depreciation expenses 32,250
69,008 69,008
Accumulated Depreciation- Office Equipment Account
Date Particular RM Date Particular RM
2006 2006
Dec 25 Disposal 550 Jul 1 Bal b/f 17,000
2007 2007
Jun 30 Bal c/f 20,393 Jun 30 Depreciation expenses 3,943
20,455 20,455
* Vehicle Depreciation Expenses calculation
= [80,000 x 20% ] + [ 85,000 x 20% x9/12 ] +[105,000 x 20% x 2/12 ]
= 16,000 + 12,750 + 3,500
= RM32,250.
* Depreciation calculation ( for disposal office equipment) = 5,500 x 10% = RM550
* Office Equipment Depreciation calculation = [ 55,880 – (17,000 -550)] x 10% = RM3,943.

ii)
PISB
Balance Sheet at 30 Jun 2007
RM RM
Non current assets
Vehicle 270,000
- Accumulated depreciation-Vehicle 69,500 200,500

Office Equipment 55,880


- Accumulated depreciation- Office 20,393 35,487 235,987 [ 2m ]
Equipment

QUESTION 3
Buildings
Date Particulars RM Date Particulars RM
2007 2007
Jan 1 Bal b/f 13,275,000 Dec 31 Bal c/f 13,725,000
Mac 3 Bank 450,000
13,725,000 13,725,000

Equipments
Date Particulars RM Date Particulars RM
2007 2007
Jan 1 Bal b/f 26,500,000 Jul 1 Disposal 40,000
Apr 1 Bank 97,200 Bal c/f 26,557,200
26,597,200 26,597,200
Equipments Cost = 50,000 + 45,000 + 800 + 1,200 + 200 = 97,200

Accumulated Depreciations - Buildings


Date Particulars RM Date Particulars RM
2007 1,336,500 2007
Dec 31 Bal c/f Jan 1 Bal b/f 1,062,000
Dec 31 Depreciations 274,500
1,336,500 1,336,500
Depreciations = 13,725,000 x 2% = 274,000

Accumulated Depreciations - Equipments


Date Particulars RM Date Particulars RM
2007 2007
Jul 1 Disposal 20,000 Jan 1 Bal b/f 10,600,000
Dec 31 Bal c/f 13,235,720 Dec Depreciations 2,655,720
31
13,255,720 13,255,720
Depreciation for Disposal = 40,000 x 10% x 5 = 20,000 ,
Depreciations = 26,557,200 x 10% = 2,655,720
QUESTION 4
i) Journal Entries :
General Journal
Date Particulars Debit (RM) Credit (RM)
2008
Jan 1 Cash / Bank 60,000
Accumulated Depreciation- Machines 600,000
[ 600,000 / 5 x 5 years ] 600,000
Dialysis Machine 60,000
Gain on Disposal
Jan 12 Equipments* 640,000
Prepaid Insurance 14,000
Cash / Bank 654,000
Sept 30 Scanner Images equipment (New)# 450,000
Accumulated Depreciation- – Scanner Images 216,000
equipment @
Loss of Disposal^ 144,000
Cash 180,000
Scanner Images equipment (old) 630,000

Calculations :
* Equipments Cost = Cash price + transportation + installations + testing
= 600,000 + 11,000 + 22,000 + 7,000 = 640,000.

# New Equipment Cost = cash paid + pair value (Exchange Allowance)


= 180,000 + 270,000 = 450,000

@ Accumulated Depreciations = [(630,000 – 90,000) / 5] x 2 years

^ Loss on disposal= Fair Value (Exchange Allowance) – Net book value


= 270,000 – [630,000 – 216,000] = -144,000

ii) Adjustment Journal Entries :


General Journal
Date Particulars Debit (RM) Credit(RM)
2008
Dec 31 Depreciations - Ambulance 46,000
Accumulated Depreciations - Ambulance 46,000
[(250,000-50,000)/5]
Depreciations – Lab Equipments 172,800
Accumulated Depreciations Lab Equipments
[640,000 x 27%] 172,800
Depreciations – Scanner Images Equipment 72,000
Accumulated Depreciations - Scanner Images
Equipment 72,000
[(450,000-90,000)/5]
QUESTION 5
i. Gain/loss = Trade in allowances – book value
= 5,700 – (36,000 – 28,224)
= - RM2,076. (loss)

Cash paid = 47,800 (cost) – 5,700 (trade in allowances)


= RM42,100
Date Particulars Debit (RM) Credit (RM)
2009 Accumulate depreciation –equipment 28,224
Equipment(new) 47,800
Loss on disposal 2,076
Equipment (old) 36,000
Cash 42,100

Depreciation expense = (equipment – accumulate depreciation) x 40%


= [(135,620 + 47,800 – 36,000) – (81,374- 28,224)] x 40%
= 94,270 x 40%
= RM37,708.

Date Particulars Debit (RM) Credit (RM)


2009 Equipment depreciation expense 37,708
Accumulate depreciation–Equipment
37,708

ii. Four methods of calculating depreciation expense of fixed assets:


1) Straight line method
2) Declining balance method
3) Units of activity
4) Sum- of-the- year digits method

QUESTION 6
i. Journal Entries :
Date Particulars Debit(RM) Credit(RM)
2011
Apr 1 Equipment depreciation expense 3,000
(12,000 x 3/12) 3,000
Accumulate depreciation – equipment
(To record depreciation expense of old equipment)

ii. Journal entries:


Date Particulars Debit(RM) Credit (RM)
2011 Accumulate depreciation –equipment 99,000
Apr 1 Equipment (new) 285,000
Loss on disposal 14,500
Equipment (old) 183,500
Cash 215,000
( To record trading of equipment and loss on exchange)

Calculation ; Accumulate depreciation = 96,000 + 3,000 = RM99,000.


Cash paid = Cost(285,000) –Trade in allowance (70,000) = RM215,000
Book value = Cost (183,500 ) –Accumulate Depreciation (99,000)
= RM84,500.
Gain/loss on disposal = Trade in allowance (70,000) – BV (84,500)
= RM14,500.
QUESTION 7
i. Journal entries
Date Particulars Debit(RM) Credit (RM)
2012
Jul 5 Depreciation expense 6,000
Accumulated depreciation-Samson 6,000

Accumulate depreciation –machine (Samson) 62,000


Machine (new - Samlan) 150,000
Loss on disposal 58,000
Machine (old- Samson) 125,000
Cash 145,000

Calculation ; Annual depreciation for old machine = (125,000-5,000) / 10 = RM12,000.


Accumulate depreciation = (12,000 x8/12) + (12,000 x 4) + (12,000 x 6/12)
= 8,000 + 48,000 + 6,000
= RM62,000.

Book value = Cost (125,000 ) – Acc dep (62,000) = RM63,000.


Gain/loss on disposal = TIA (5000) – BV (63,000)
= 58,000

ii. Journal entries


Date Particulars Debit(RM) Credit (RM)
2012 Machine depreciation espenses 9187.5
Dis 31 Accumulate depreciation –machine 9187.5
[(150,000-3000) /8] x 6/12

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