The following are transactions related to a machine it purchased by Grey Simmons Ltd.  Grey Simmons Ltd has a financial year ending of 30 June.  The business is registered for GST.

1 July 2018:

Purchased a new machine for $56,000 cash.  The machine had a recommended retail price of $56,000 plus GST, but after careful negotiation it was purchased for $53,000 plus GST. The delivery of the machine cost $1,100 (including GST) and $2,200 (including GST) was paid for installation.  The machine, the delivery and the installation charges were all paid in cash.

The straight-line method of depreciation will be used for this machine. It has an estimated useful life of 5 years with a residual value of $6,000.

1 July 2019:

Paid $6,600 (GST inclusive) for the installation of a new motor to the machine to improve the machine's productivity.  The carrying value of parts removed from the machine was $1,000

The useful life of the machine was extended by 3 years and the residual value was revised to $2,000.

30 June 2021:

Due to changes in the production process, the machine was scrapped for $30,000 cash (excluding GST).

Required:       

a. Prepare necessary general journal entries to record the following transactions.  

b. The purchase of the machine on 1 July, 2018.                   

c. The depreciation charge for the reporting period ended 30 June 2019.   

d. The purchase of the new motor on 1 July 2019.                    

e. The disposal of the Machinery on 30 June 2021.                  

b. Record the payment of the bill on 30 November 2020 in the general journal.

Answer rating: 100% (QA)

Purchase price of the Machinery including GST 56000 It is also mentioned that it was purchased for 5... View the full answer