On 1 January 2017, Peachy Ltd bought a machine for $142 000 cash. The useful life...

On 1 January 2017, Peachy Ltd bought a machine for $142 000 cash. The useful life of the machine was 10 years and the residual value was $17 000. The machine was to be depreciated using the straight line method. On 30 September 2019, the machine was traded in for a new model which cost $220 000. Peachy Ltd received a trade in allowance of $90 000 for the old machine. The new machine had a residual value of $25 000 and is to be depreciated using the diminishing balance method at a rate of 15%.

Prepare General Journal entries to record all the transactions for the above events up to 30 June 2020. Post the journal into the ledger. NOTE: you have to show the recording of the depreciation expense at the end of EACH financial year. Peachy Ltd uses the 30th June as the end of its financial year. You may find it helpful to draw a timeline showing each financial year to make sure you have all the required entries. Assume when the machine was traded-in on 30 September 2019 that the additional amount payable on top of the trade-in allowance was paid with cash.

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ekkarill92 answered 1 year ago

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