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Case study one
The purchase price consists of the amount paid by the seller for acquiring the asset. All the direct cost associated with buying the asset also makes part of the purchase cost. In this case, Nicolaidis purchased the two machines at a cost $700000 which includes GST. Since the GST is directly related with the purchasing the asset therefore purchase is recorded on 1 January 2017 by the amount of $ 700000
The book of original entry that records all the transactions of purchase and sale of assets on credit or in cash, about writing off the bad debts, correcting errors in ledger accounts and adjusting ledger entries all are recorded in general Journal. The ledger is a book where all the accounts are maintained and posted, example general ledger, sales ledger and purchase ledger (Warren & Jones, 2018).
The transactions which wer...
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Question 1- Option D
Question 2 – Option C
Question 3 – Option B
Question 4 – Option D
PROBLEM ! : BONDS
Effective interest method is typically used for bonds that are issued at discount or premium..
In the given case, the interest actually paid per year is 6% of 1,000,000 = $ 60,000 which would be credited as cash.
However the interest expense recognised for 2017 = 5% of 1,025,000 = $51,250
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