1. Vehicles are depreciated at 20% p.a. on the straight-line basis.

2. The business considers the residual value on the vehicles to be 25% on cost.

3. Depreciation on equipment is calculated at 20% p.a. on the diminishing-balance method.

4. Depreciation on machinery is calculated based on the units that the machine produces.

5. No depreciation has been recorded for the current year.

6. All amounts are VAT inclusive, unless otherwise stated.

7. All suppliers are considered to be registered VAT vendors.

New assets bought:

A Vehicle: 31 October 20x1

– A new bakkie was bought from KEET MOTORS for an amount of R174.420.

– 90% of the purchase price of the car was financed by a loan from SMP Bank. The other 10% was settled in cash.

– The vehicle was available for use on the same day.

B Machinery: 30 April 20x2
– Purchased a new machine from Machine Manufacturers (Pty) Ltd on credit for R334 020.

– The machine was delivered to Change That on the same day. A stabiliser was fitted to the machine to ensure that the machine would be suitable for use in the factory.

– The cost of the stabiliser was R63 000 (VAT excluded) that was settled in cash.

– The business also paid a labour cost of R13 680 for the conversion of the machine.

– It has been estimated that the machine will be able to produce 50 000 units.
– In the current year, a total of 8 000 units was produced from the day that the machine was available for use.

– The machine was available for use on 1 May 20x2, but only brought into use on 31 May 20x2.

Assets sold:

C Vehicle: 31 March 20x2

– Sold a vehicle for R71 820.

– The vehicle was bought on 1 July 19x8 at a total cost of R140 000 (VAT excluded) and was available for use on the same day.

C Machine: 30 June 20x2

– Sold the machine shown in the trial balance as R400 000 for R34 200.

– It had been estimated that the machine would be able to produce 35 000 units.

– In the current year, a total of 10 500 units was produced from the day that the machine was brought into use.

You are required to

Record the transactions and depreciation in the general journal as at 31 August 20x2.

Transcribed Image Text:

Titus Enterprises EXTRACT FROM THE TRIAL BALANCE AS AT 31 AUGUST 20x1 Details Debit 840 000 00 400 000 00 355 000 00 Vehicles Machinery Equipment Accumulated depreciation: Vehicles Accumulated depreciation: Machinery Accumulated depreciation: Equipment Fol. B3 B4 B5 B6 B7 B8 Credit 140 000 00 240 000 00 120 000 00