Reference no: EM132566739

Question -

a) The business purchased office fittings costing $48,950 including GST from Light Fixtures Ltd on 8th March 2020 and paid for it by using the bank account. It is expected to have a residual value of $3,000 at the end of its useful life of 10 years. The business uses the straight-line method to calculate its depreciation.

i. Use the journal entry screen to record the asset purchase on 8th March 2020.

ii. Create the month end journal entry to record the depreciation expense on the Office Fittings for March.

b) The business also purchases a Computer Server from Digital World on 11th March 2020 which is to be used for the business. The total expenditure on the Computer Server amounted to $12,430 including GST and was paid from the bank account. The estimated useful life of the Computer Server is 6 years and will be worth $2,800 at the end of the 6 years. Computer is depreciated using the diminishing balance method and the rate of depreciation is 21%. The Computer Server was sold for $11,440 including GST on 28th March 2020.

i. Use the journal entry to record the purchase of the computer on 11th March 2020.

ii. Record the journal entry for the sale of the Computer Server on 28th March 2020.