- 20 Marks
CIB GH – INTRODUCTION TO ACCOUNTING – APRIL 2024 – L1 – Q2 – Non-Current Assets Ledger Accounts
Prepare ledger accounts for machinery, motor vehicles, their accumulated depreciation, and disposal account based on given transactions and depreciation policies.
Question
DG Ltd. had, among others, the following balances in its books at 1st January 2023.
| Debit (GHȼ) | Credit (GHȼ) | |
|---|---|---|
| Machinery at Cost | 750,000 | |
| Machinery Accumulated Depreciation | 301,000 | |
| Motor Vehicles at Cost | 1,000,500 | |
| Motor Vehicles Accumulated Depreciation | 402,000 |
The following information relates to the Non-Current Assets for the financial year ended 31st December, 2023: a) On 1st July, 2023 DG Ltd. purchased machinery at a Cost Price of GHȼ 75,000, paying by cheque. b) On 1st December, 2023 DG Ltd purchased machinery at a Cost Price of GHȼ 27,600, on credit from BD Machinery Ltd. c) No disposal of machinery took place during the year ended 31st December, 2023. d) Machinery is depreciated at 20% per annum using the straight-line method, the rate being charged for each proportion of the year the machinery is owned. No allowance is made for any residual value. All machinery held as at 31st December, 2023 had been purchased within the previous four years. e) On 30th June, 2023 Motor Vehicles which originally cost GHȼ 40,000 and with a net book value of GHȼ 16,000 at the date of sale, were sold at a profit of GHȼ 600. The disposal receipt was paid into the bank account. f) No purchases of Motor Vehicles took place during the year ended 31st December, 2023. g) Motor Vehicles are depreciated at 25% per annum using the straight-line method, the rate being charged for each proportion of the year the Motor Vehicles are owned. No allowance is made for any residual value. All Motor Vehicles held as at 31st December, 2023 had been purchased within the previous three years.
You are required to: Prepare the following Ledger Accounts of DG Ltd for the year ended 31st December, 2023, where appropriate showing the balance carried down to the next Financial Year. Dates are not required.
a) Machinery (4 marks)
b) Accumulated Depreciation of Machinery (4 marks)
c) Motor Vehicles (4 marks)
d) Accumulated Depreciation of Motor Vehicles (4 marks) e) Disposal of Motor Vehicles (4 marks)
[Total: 20 marks]
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