Reference no: EM132554494

Brain and Smart Ltd completed the following transactions during 2019 and 2020. The financial year for the company ends on 30 June each year.

Required:

Question 1: Prepare journal entries as necessary for each of the transactions below including any adjusting entries at 30th June 2020 (narrations are not required).

2020

1 Jan

Purchased new Land and Building for $5,250,000 from Custom Credit Ltd. The value of the Land was 40%. Financing arrangements included payment of an initial deposit of 10% of the purchase price and the signing of a 7.5% p.a. Mortgage. At 30th June the quarterly payment, April to June of $168,962 (including interest of $13,126), remains unpaid.

Question 2: Record the asset purchase (ignore GST), and any adjusting entry at 30th June.

23 Apr The Company paid warranty costs of $450 in cash to make good warranty conditions on a product sold in 2017. The company has a Provision for Warranty Costs account.

6 May Issued a 7% 60 day promissory note to Carbon Ltd in settlement of an account for $14000 for goods purchased from them in September last year.

26 June

Purchased $14300 worth of inventory (GST included) from AZD Ltd on credit terms of 2/10, n/30 (record GST)

30th June

The GST Control account of the company has GST Paid of $4200 and GST Collected of $5400 during the period April to June. Make the entry for the settlement of GST with the Australian Tax Office.