Account Essay

593 WordsJul 21, 20113 Pages
QUESTION 1 Agatha Co made up its financial statements to 31 December each year until 31 December 20X7, when the company changed it’s accounting date by making up its next financial statements for the fifteen months to 31 March 20X9. The company’s depreciation policy is to charge proportionate depreciation in the periods of purchase and sale of its non current assets, charging depreciation as from the first day of the month in which assets are acquired, and up the last day of the month before the month of any disposal. Annual rates of depreciation taken are: Plant and machinery: 15 per cent straight line Motor vehicles: 25 per cent straight line At 1 January 20X8 the following balances existed in the company’s accounting records: RM Plant and machinery: cost 819,000 accumulated depreciation 360,000 Motor vehicles: cost 148,000 accumulated depreciation 60,000 During the fifteen months ended 31 March 20X9 the following transactions took place: (a) l0 January 20X8 An item of plant purchased. The cost was made up as follows. Cost ex factory RM 41,200 Delivery 300 Installation costs 800 Construction of foundations 3,600 Spare parts for repairs 4,000 Cost of one year maintenance agreement 2,000 (b) 18 April 20X8 A new motor vehicle was purchased for RM 18,000. An existing vehicle which had cost RM 12,000, and which had a book value at 1 January 20X8 of RM6,000, was given in part exchange at an agreed value of RM 5,000. The balance of RM 13,000 was paid in cash. Required Prepare the ledger accounts to show the balances at 1 January 20X9 and to record the non current asset transactions as stated. Question 2 Diamond Inc is a trading company making up its accounts regularly to 31 December each year. At 1 January 20X5 the following balances existed in the records of

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