Answers to Review Questions

Volume 1 - Chapter 27

1. (a) Provision for depreciation on equipment 20X3 £ 20X3 £ Dec 31 Balance c/d 650 Dec 31 Profit & Loss 650

20X4 20X4 Dec 31 Balance c/d 1,950 Jan 1 Balance b/d 650

20X5 20X5 Dec 31 Equipment disposal 3,250 Jan 1 Balance b/d 1,950

1. (b) Equipment Disposal 20X5 £ 20X5 £ Dec 31 Equipment at cost 6,500 Dec 31 Provision for depreciation 3,250

2. (a) Provision for depreciation on machinery 20X4 £ 20X4 £ Dec 31 Balance c/d 500 Dec 31 Profit & Loss 500

20X5 20X5 Dec 31 Balance c/d 950 Jan 1 Balance b/d 500

20X6 20X6 Dec 31 Balance c/d 1,355 Jan 1 Balance b/d 950

20X7 20X7 Jun 30 Machinery disposal 1,355 Jan 1 Balance b/d 1,355

2. (b) Machinery Disposal 20X7 £ 20X7 £ Jun 30 Equipment at cost 5,000 Jun 30 Provision for depreciation 1,355

3. Equipment disposal account

Equipment at cost 15,000 Depreciation 9,700

4. Provision for depreciation – Machinery 20X5 £ 20X5 £ Dec 31 Balance c/d 3,000 Dec 31 Profit & Loss 3,000

20X6 20X6 Dec 31 Balance c/d 5,225 Jan 1 Balance b/d 3,000

20X7 20X7 Dec 31 Balance c/d 6,919 Jan 1 Balance b/d 5,225