The Machine Grinding Company sold the machine for 40,000 at the start of Year 4 and replaced
Question:
The Machine Grinding Company sold the machine for £40,000 at the start of Year 4 and replaced it with a new machine costing £100,000. The new machine had an estimated useful life of 8 years and an estimated residual value of £10,000 at the end of that period. Use of the new machine led to a reduction of wages and running costs to a level of £13,000 a year.
Required:
(a) Prepare a spreadsheet for Year 4, analysing the transactions and events of the company.
(b) Prepare a statement of financial position (balance sheet) at the end of Year 4 and an income statement (profit and loss account) for that year.
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