Problem
A machine was acquired by Wally World on 1 July 20X5 for $7,260 cash, GST inclusive. Installation costs of this machine were $660 cash, GST inclusive. The management decided to write this machine off over four years by equal charges to profit and loss. Scrap value of the machine is estimated to be $300, plus GST, at the end of year four.
Management decided to replace the machine on 1 January, 20X8 with a new machine costing $9,405 cash, GST inclusive. Installation costs were $429 cash, GST inclusive. The machine has no residual value. The old machine was disposed of for $429 cash, GST inclusive. The management decided to write off the new machine on the same basis as the old machine.
Required
(a) Prepare a disposal worksheet.
(b) Prepare the machinery account, disposal account and accumulated depreciation machinery account for the years ending 30 June 20X6, 20X7 and 20X8.
Round amounts to the nearest dollar.
Summary of Question:
This problem is belongs to Accounting and it explains about preparing ledger accounts for machinery and depreciation for machinery for a small business.