Bobbin runs a business altering and repairing clothes.When she started business on 1st January 20x2 she bought a Soopastitch sewing machine for $2500..She depreciates sewing machines using the straight line method at a rate of 20% p.a and she charged a full year of depreciation in the year of acquisition and none in the year of disposal.
The business has now grown such that she needs a faster machine and she will upgrade to the advance Soopastitch during Dec 20x5.The Soopastitch salesman has offered her a part exchange deal as follows:
PEA for old Soopastitch $750
Balance to be paid in cash for advanced Soopastitch $4850
Could you please tell me the amount to write for the below ledger entries:
PEA
Dr Nc assets cost account (part of cost of new asset)
Cr disposals a/c (sale proceeds of old asset)
Cash paid
Dr NC asset cost account
Cr Cash account
Ask the Tutor ACCA FA
Part exchange allowance
Dr Nc assets cost account (part of cost of new asset) $750
Cr disposals a/c (sale proceeds of old asset) $750
Dr NC asset cost account $4850
Cr Cash account $4850
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