Yamyam company maintains its motor vehicle accounts at cost and provides for depreciation at 20% per annum on the diminishing balance method. A full years depreciation is provided in the year of purchase and none in the year of disposal on Jan 1 st 2010 the company had the following motor vehicles. KAA 4044 at cost of sh. 4,000,000 written down of shs. 2,100,000. KAB 8021A at cost of shs. 4,200,000 with accumulated depreciation of shs. 1,600,000 KAC 1407 B at cost shs. 5,500,000 with accumulated depreciation of shs. 3,300,000 During the year ended 31st Dec 2010, the following were the transactions involving motor vehicles: KAD 1243 H purchased for shs. 5,200,000 KAB 8021A involved in accident shs. 2m were received at compensation from insurance company  

Prepare the motor vehicle account, provision for depreciation on motor vehicle and disposal of motor vehicle account. (12mks) b) An 8% note with a face value of shs. 30,000 is received for a loan to yield the market rate of 10%. The note becomes due in 3 years prepare journal entries including the amount of the loan, interest per year, amortization of interest and amount at maturity.

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