Richard and Rachel operate a coffee shop, Richell Coffee Roaster Pty Ltd, with a financial year...

Richard and Rachel operate a coffee shop, Richell Coffee Roaster Pty Ltd, with a financial year ending 30 June. On 1 July 2017, they purchased a new espresso machine for $23,000 (ignore GST). They then paid a further $500 (ignore GST) for delivery of the machine and $900 (ignore GST) to have it installed. All amounts were paid in cash. The company estimates that the machine has a 4 years useful life, and a residual value of $4,400 (ignore GST). They intend to depreciate the machine using the straight-line method.

On 30 June 2020, the company sold the espresso machine for $10,000 cash (ignore GST).

REQUIRED:

Calculate the cost of the espresso machine.
Prepare a depreciation worksheet covering the entire useful life of the machine.
Show the required journal entries to record:

1. the acquisition of the machine (combine as 1 entry)
1. the annual depreciation charge (note: only 1 entry required, as the journal entry will be the same each year, only with different dates)
1. the disposal of the machine on 30 June 2020.

Narrations are not required.

Solutions

Expert Solution

Please comment for any explanation,

Thanks,

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Rachel plans to open a coffee shop with her friends. After the initial investment, the project...

Rachel plans to open a coffee shop with her friends. After the initial investment, the project will generate $1 million per year for the next five years, and offers the internal rate of return (IRR) of 15%. What is the project's initial investment? 3,352,155.10 5,000,000 4,213,154.20 4,250,000

First Cup Ltd., a Canadian coffee retailer and roaster which operates more than 1,000 cafes in...

First Cup Ltd., a Canadian coffee retailer and roaster which operates more than 1,000 cafes in Canada, reported the following balances as at December 31, 2020: 7% Par $100 convertible bonds, issued at par $250,000 3,000 call options, each entitled to purchase 1 common shar Cumulative Preferred shares, 36,000 convertible shares outstanding $960,000 Common shares, 112,500 shares issued and outstanding $2,880,000 Contributed surplus on repurchase of common shares $31,200 Retained earnings $1,032,000 First Cup Ltd. applies IFRS. The...

Sri Coffee Pty Ltd is considering investing in a new coffee bean roasting machine. The machine...

Sri Coffee Pty Ltd is considering investing in a new coffee bean roasting machine. The machine is estimated to cost $150,000 which can last for 7 years before it becomes too costly to maintain and can be sold for scrap at $15,000. The project is estimated to bring in additional $30,000 cash inflow and incur $10,000 in additional expenses related to the running the machine in the first year. The company expects there will be an annual sales growth of...

The statement of profit or loss for Blue Cross (Pty) Ltd for the financial year ended...

The statement of profit or loss for Blue Cross (Pty) Ltd for the financial year ended 28 February 2019 is as follows: R Sales (note 1) 2000 000 Cost of sales (800 000) Gross profit 1200 000 Salaries (450 000) Depreciation (note 3) (100 000) Repairs (15 000) Profit from the sale of machinery (note 4) 30 000 Local dividends received 35 000 Interest received 28 000 Profit before tax 728 000 Note 1 Blue Cross (Pty) Ltd received a...

In 2019, 3 friends (Tom, Rob and Susan) incorporate Rags Pty Ltd to operate a retail...

In 2019, 3 friends (Tom, Rob and Susan) incorporate Rags Pty Ltd to operate a retail fashion shop that only sells latest trendy fashion designs. Tom and Rob each held 45% of issued shares; Susan held remaining 10% of the shares. Company’s constitution stated all 3 were directors, with Tom appointed as MD. Susan is very critical of Tom’s management but lacks the support of Rob in confronting Tom about his management style. Rob tells Tom about Susan’s dissatisfaction. To...

During the 2018/19 financial year, ABC Pty Ltd – a non-resident private company (not a SBE)...

During the 2018/19 financial year, ABC Pty Ltd – a non-resident private company (not a SBE) received interest income of $6,000 and a franked dividend of $10,000 (with $3,150 of franking credits attached). ABC Pty Ltd had allowable deductions of $7,800. Required: What will ABC Pty Ltd’s net tax payable or refundable be? All calculations must be shown.

You have recently been appointed management accountant for Rugby Coffee Mugs Pty Ltd. The company commenced...

You have recently been appointed management accountant for Rugby Coffee Mugs Pty Ltd. The company commenced its operations on 1 July 2019 manufacturing one size coffee mugs with individual club names and club logos of rugby union clubs playing in the New South Wales, Queensland, Victoria and Western Australia local rugby union competition. The company currently does not have any management accounting controls and part of your appointment involves improving the company’s manufacturing internal control systems to facilitate the projection,...

Question 4 The statement of profit or loss for Blue Cross (Pty) Ltd for the financial...

Question 4 The statement of profit or loss for Blue Cross (Pty) Ltd for the financial year ended 28 February 2019 is as follows: R Sales (note 1) R2000 000 Cost of sales R(800 000) Gross profit R1200 000 Salaries R(450 000) Depreciation (note 3) R (100 000) Repairs R(15 000) Profit from the sale of machinery (note 4) R30 000 Local dividends received R35 000 Interest received R28 000 Profit before tax R728 000 Note 1 Blue Cross (Pty)...

What would be the financial challenges of opening a small business i.e. bakery/coffee shop?

You are provided with the following financial information for ‘Don Store Pty Ltd’, a business selling...

You are provided with the following financial information for ‘Don Store Pty Ltd’, a business selling cosmetics for women in the South Africa. Don Store PTY LTD COMPARATIVE BALANCE SHEETS AS AT JUNE 30 2020 2019 Current Assets Cash on Hand $2 400 $8 000 Cash at Bank 870 2 018 Accounts Receivable (net) 19 464 9 000 Inventory 56 000 36 000 Prepaid Expenses 3 300 $82 034 1 300 $56 318 Non-Current...

Subjects