At the end of Sovereign Ltd’s financial year, 30 June 2016, the following items must be resolved before adjusting entries and financial statements are prepared. Ignore GST.

1.    On 1 July 2015, Sovereign Ltd purchased a used machine for $48 000 cash. The cost was debited to the Machinery account. Prior to use, additional cash expenditures were made for painting and repairing the machine, $4200, and installing and testing the machine, $3000. These additional expenditures were debited to Repairs and Maintenance Expense. The repairs and installation were completed on 1 October 2015, and the machine was put to use. The machine has a useful life of 5 years with a residual value of $4000. Sovereign Ltd uses straight-line depreciation and records depreciation to the nearest month.

2.    Land and a building were purchased on 2 July 2015 for $180 000 cash, debited to the Land account. The appraised values of the building and land were $100 000 and $60 000, respectively. The building has a useful life of 20 years with a residual value of $6000. Sovereign Ltd uses straight-line depreciation for buildings.

3.    A new truck was purchased on 1 March 2016; Sovereign Ltd paid cash of $55 500 and also obtained a 12-month loan payable for the amount of $30 000. The Trucks account was debited for $85 500. The truck has a useful life of 4 years with a residual value of $20 000 and is to be depreciated by the diminishing balance method. However, due to an oversight, the business used the straight-line method.

Required

A. Prepare journal entries on 30 June 2016 to correct the accounts.

B.  Prepare journal entries as necessary to record depreciation expense after the corrections in requirement A have been made.