Entity A purchased a property (Land and Building) for $5,000,000 on 1 July 2017. Entity A...

Entity A purchased a property (Land and Building) for $5,000,000 on 1 July 2017. Entity A paid 60% by a cheque on 1 July 2017 and the balance was settled on 1 August 2017 through a bank transfer. The value of the land was $500,000 and the buildings $4,500,000. The expected useful life of the building is 50 years without any residual value.

On 30 June 2019, the property was revalued to $7,562,208 (land $980,208 and buildings $6,582,000).

On 30 June 2021, the property was sold to Entity B for $7,600,000. Entity A received 60% on the same date and the balance was settled on 1 August 2021.

Entity A opts for annual transfer of the revaluation reserve.

REQUIRED:

According to relevant accounting standards, prepare journal entries to record the transactions of Entity A from 1 July 2017 to 1 August 2022.

ACCOUNT NAMES FOR INPUT:

ANSWERS:

Journal Entries:

Date	Account Name	Debit ($)	Credit ($)	Hints For Items If Necessary
1-Jul-17	Blank 1	Blank 2
	Blank 3	Blank 4
	Blank 5	Blank 6		An Asset. Judge Dr/Cr side.
	Blank 7		Blank 8
1-Aug-17	Blank 9	Blank 10
	Blank 11		Blank 12
30-Jun-18	Blank 13	Blank 14
	Blank 15		Blank 16
30-Jun-19	Blank 17	Blank 18
	Blank 19		Blank 20
30-Jun-19	Blank 21	Blank 22
	Blank 23		Blank 24
	Blank 25	Blank 26
	Blank 27	Blank 28		An Asset. Judge Dr/Cr side.
	Blank 29		Blank 30
30-Jun-20	Blank 31	Blank 32
	Blank 33		Blank 34
	Blank 35	Blank 36
	Blank 37		Blank 38
30-Jun-21	Blank 39	Blank 40
	Blank 41		Blank 42
	Blank 43	Blank 44
	Blank 45		Blank 46
30-Jun-21	Blank 47	Blank 48
	Blank 49		Blank 50
	Blank 51	Blank 52
	Blank 53	Blank 54		Judge Dr/Cr side.
	Blank 55	Blank 56		P/L item. Judge Dr/Cr side.
	Blank 57	Blank 58		Judge Dr/Cr side.
	Blank 59		Blank 60
30-Jun-21	Blank 61	Blank 62
	Blank 63		Blank 64
1-Aug-21	Blank 65	Blank 66
	Blank 67		Blank 68

Expert Solution

Journal Entries for given transactions are as follows:

Date	Particulars	Debit ($)	Credit ($)
1-Jul-2017	Land	500,000
	Building	4,500,000
	Bank [5,000,000*60%]		3,000,000
	Payable		2,000,000
	(Asset purchased and payment made for 60% of the transaction)

1-Aug-2017	Payable	2,000,000
	Bank		2,000,000
	(Balance payment made)

30-Jun-2018	Depreciation [4,500,000/50 years]	90,000
	Accum. Depreciaton		90,000
	(Depreciation provided for the year 2017-18 on Building)

30-Jun-2019	Depreciation	90,000
	Accum. Depreciaton		90,000
	(Depreciation provided for the year 2018-19 on Building)

30-Jun-2019	Land [980,208 - 500,000]	480,208
	Building [6,582,000 - 4,500,000]	2,082,000
	Accum. Depreciation	180,000
	Revaluation Surplus		2,742,208
	(Revaluation of Assets)

30-Jun-2020	Depreciation [6,582,000 / 48years]	137,125
	Accum. Depreciation		137,125
	Revaluation Surplus [137,125 - 90,000]	47,125
	Retained Earnings		47,125
	(Depreciation for year 2019-20 and reversal of excess depreciation on Revaluation)

30-Jun-2021	Depreciation	137,125
	Accum. Depreciation		137,125
	Revaluation Surplus	47,125
	Retained Earnings		47,125
	(Depreciation for year 2020-21 and reversal of excess depreciation on Revaluation)

30-Jun-2021	Revaluation Surplus [2,742,208 - (47,125 * 2)]	2,647,958
	Retained Earnings		2,647,958
	Accum. Depreciation	274,250
	Building		6,582,000
	Land		980,208
	Bank (7,600,000 * 60%)	4,560,000
	Receivable	3,040,000
	Gain on Disposal [(7,600,000 - {980,208 + (6,582,000 - 274,250)}]		312,042
	(Asset disposed, revaluation surplus balance reversed and Gain on Disposal recognized)

1-Aug-2021	Bank	3,040,000
	Receivable		3,040,000
	(Balance amount received)

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