Please help me journalize the following entries.
1. On 1 July 2017 the balance of Vehicles at cost amounted to R180 000 and the balance
of Accumulated depreciation: Vehicles was R72 000.
7. Depreciation is calculated at 20% per annum on the straight line method.
12. On 1 April 2018 the entity sold a vehicle with cost price R90 000 and Accumulated
Depreciation at 1 July 2017 of R36 000 for R50 000 cash.
21. No general journal entries were made for any of the above transactions nor was the
depreciation expense calculated for the year ended 30 June 2018.
To journalize the given entries, we need to follow the double-entry accounting system. Here's how you can journalize each entry:
1. On 1 July 2017, the balance of Vehicles at cost amounted to R180,000, and the balance of Accumulated depreciation: Vehicles was R72,000.
To journalize this entry, we'll debit the Vehicles account for R180,000 and credit the Accumulated depreciation: Vehicles account for R72,000.
Journal Entry:
Date Account Debit Credit
1-Jul-17 Vehicles R180,000
Accumulated depreciation: Vehicles R72,000
7. Depreciation is calculated at 20% per annum on the straight-line method.
Depreciation is an expense, so it needs to be recorded annually. Since no specific date is given, we will assume it is recorded at the end of the financial year, which is 30 June 2018.
To calculate the depreciation expense, we'll use the formula: Depreciation expense = (Cost - Residual value) * Depreciation rate.
In this case, the cost of the vehicle is R180,000, and the depreciation rate is 20%. Let's assume that the residual value is zero.
Depreciation Expense = (R180,000 - R0) * 20% = R36,000
Therefore, the Depreciation Expense would be R36,000.
The journal entry to record the annual depreciation expense for the year ended 30 June 2018 would be as follows:
Journal Entry:
Date Account Debit Credit
30-Jun-18 Depreciation Expense R36,000
12. On 1 April 2018, the entity sold a vehicle with a cost price of R90,000 and Accumulated Depreciation at 1 July 2017 of R36,000 for R50,000 cash.
To journalize this entry, we'll need to record the cash received from the sale, the removal of the cost of the vehicle, and the removal of the accumulated depreciation.
We'll debit the Cash account for R50,000 to record the cash received. We'll credit the Vehicles account for the original cost price of the vehicle of R90,000 and credit the Accumulated depreciation: Vehicles account for R36,000.
Journal Entry:
Date Account Debit Credit
1-Apr-18 Cash R50,000
Vehicles R90,000
Accumulated depreciation: Vehicles R36,000
21. No general journal entries were made for any of the above transactions, nor was the depreciation expense calculated for the year ended 30 June 2018.
Since no journal entries were made initially for these transactions, we would need to create the missing entries.
We have already determined the necessary journal entries in the explanations above. We will summarize them here:
Journal Entry for 7:
Date Account Debit Credit
30-Jun-18 Depreciation Expense R36,000
Journal Entry for 12:
Date Account Debit Credit
1-Apr-18 Cash R50,000
Vehicles R90,000
Accumulated depreciation: Vehicles R36,000
You can now journalize the missing entries 7 and 12 by recording the corresponding debits and credits mentioned above.