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Bobbin runs a business altering and repairing clothes.When she started business on 1st January 20×2 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 20×5.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:
PEADr 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
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