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Ndugu Agribusiness Enterprise maintains a system of double entry in which depreciation is recorded in the assets account. The depreciation policy for farm machinery in this enterprise is reducing bala
Ndugu Agribusiness Enterprise maintains a system of double entry in which depreciation is recorded in the assets account. The depreciation policy for farm machinery in this enterprise is reducing balance method based on monthly ownership at the rate of 10% per annum.
The financial year ends on 31st December annually. The following farm equipment were purchased on the stated dates.
i). January 1, 2004 2 motor vehicles at $500,000 each
ii). June 30, 2004 4 tractors at $400,000
iii). March 31, 2006 3 chaff cutters at $200,000
iv). 1st October, 2006, 2 tractors bought for $500,000 was disposed of for $ 200,000.
v). On 30th April, 2007, 1 grinding machine bought for $50,000
vi). On April 30, 2007 1 motor vehicle was disposed of for $200,000 and a combine harvester was purchased for $300,000.
You are required to show:
a) Depreciation account (3 marks)
b) Profit and loss account (4 marks)
c) Balance Sheet for 2004, 2005, 2006, and 2007. (8 marks)
