The machine used in the potato chip manufacturing division is of a specialised nature

and therefore had to be imported from a supplier in the United States.

The machine, with a purchase price of $$100000,$ was ordered on $15$ May $2024$ and

was shipped to South Africa on $20$ May $2024.$ All risks and rewards in relation to the

machine were passed to Blue Crane Ltd on the shipping date. The spot rates

applicable were $$1$:R$18,72$ and $$1$:R$18,75$ on $15$ May $2024$ and $20$ May $2024$

respectively. The $$100000$ was paid in cash to the supplier on $20$ May $2024.$

Blue Crane Ltd incurred the following additional costs, in cash, with regard to the

purchase of the machine:

Rand

$31$ May $2024$: Transport cost from the harbour to Blue Crane Ltd

premises

$95000$

$25$ June $2024$: Installation of the machine on the supportive base $50000$

$5$ July $2024$: Training staff on the operation of the machine $15000$

The machine has a useful life of $10$ years and a residual value of R$220000.$Additional information:

$•$ The manufacturing plant, including all components thereof, and the machine, including all components thereof, was available for use and began operating on $1$ 

August $2024.$

$•$ Depreciation on all components is calculated using the straight$-$line basis. Prepare all the general journal entries required to account for the machine,

refer to note $3,$ in the records of Blue Crane Ltd for the financial year ending

$31$ December $2024.$

 

 

Answer rating: 100% (QA)

Here are the journal entries for Blue Crane Ltd regarding the machine 1 May 20 2024 Purchase of the ... View the full answer