Question

Aussie Furniture Removals Limited provides furniture removal services in Australia. The following transactions relate to the purchase of a new delivery truck. Aussie Furniture Removals Limited is registered for GST and the GST rate is 10%.

1 July 2019

On 1 July 2019, a new delivery truck was purchased. The delivery truck had a recommended retail price of $165,000 (excluding GST), but after careful negotiation, it was purchased for $158,000 (excluding GST). The company also paid stamp duty of $5,000 (GST exempt) and            $4,000 (excluding GST) to paint the company’s logo on the delivery truck. The delivery truck was purchased on credit, but the painting and stamp duty were all paid in cash. The delivery truck is depreciated using the straight-line depreciation method and company management estimates the delivery truck to have a useful life of 5 years with a residual value of $17,000.

REQUIRED:

1. Prepare the journal entry to record the purchase of the delivery truck on 1 July 2019.
2. Prepare the journal entry to record the depreciation for the year ended 30 June 2020.

Answer 1