O’Connor Ltd started business on 31 March 2010 in the recycling industry. The company balances its accounting records at month-end and its reporting date is 31 December. Ignore GST. The following events occurred during 2010 and 2011:
2010 April 1 Paid $140 000 cash for a second-hand disposal truck. Paid $1 500 cash to recondition the truck’s engine. Aug 31 Paid $600 cash for the truck’s transmission repairs and oil change. Dec 31 Recorded depreciation on the truck at 40% per annum on the diminishing balance. 2011 Mar 13 Paid $600 cash to replace a damaged bumper bar on the truck. Jul 1 Installed a new motor in the truck for a cost of $11 000. The company considered that the carrying amount of the old motor was only $600 at this date, and the old motor was written off. With the new motor installed, the truck’s depreciation rate using the diminishing balance method was revised to 30% from July 1. Dec 31 Recorded depreciation on the truck.
Required: prepare general journal entries to record the above events. Narrations are not required.
Date | Account | Debit | Credit | Calculations | |||||||
01-04-2010 | Truck Dr | 141500 | 140000+1500 | ||||||||
To Cash | 141500 | ||||||||||
31-08-2010 | Repairs Dr | 600 | |||||||||
To Cash | 600 | ||||||||||
31-12-2010 | Depreciation Dr | 42450 | 141500*40%*9/12 | ||||||||
To Truck | 42450 | ||||||||||
13-03-2011 | Repairs Dr | 600 | |||||||||
To Cash | 600 | ||||||||||
01-07-2011 | Truck Dr | 10400 | 11000-600 | ||||||||
Writing off of Motor | 600 | ||||||||||
To Cash | 11000 | ||||||||||
31-12-2011 | Depreciation Dr | 36227.5 | ((141500-42450)*40%*6/12)+((141500-42450+10400)*30%*6/12) | ||||||||
To Truck | 36227.5 |
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