Branson Ltd owns two delivery vehicles (each with a residual value of $5000 and useful life of
Question:
Branson Ltd owns two delivery vehicles (each with a residual value of $5000 and useful life of 4 years) and uses the straight-line method of depreciation. The business closes its accounting records annually on 30 June. The following events and transactions occurred during the first 3 financial years. Ignore GST.
2016–17 July 1 June 1 June 30 | Purchased a delivery truck from Mangrove Mountain Motors for $60 000 cash plus stamp duty of $620, and registration and third- party insurance of $840. Made minor repairs to the truck for cash at a cost of $420. Recorded annual depreciation. |
2017–18 July 1 June 30 | Purchased a delivery van from Northern Motors for cash, $45 000. This van was a used vehicle which was expected to last 4 years from the date of purchase. Fitted four new tyres to the van at a cash cost of $1320. Recorded depreciation on both truck and van. |
2018–19 July 1 June 30 | Paid $3700 for an overhaul of the motor of the delivery truck. This expenditure is expected to extend the useful life by 1 year. The parts replaced in the truck were considered to have a carrying amount of $2000. Installed a two-way radio in the delivery van at a cost of $1600 to improve efficiency. This expenditure will not increase the useful life. Recorded depreciation on both truck and van. |
Required
Prepare entries (in general journal form) to record the transactions of Branson Ltd as they relate to both vehicles to 30 June 2019.
Step by Step Answer:
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett