Reference no: EM132567745

Question - Jack and Jill operate a coffee shop, Espresso Maestro Pty Ltd, with a financial year ending 30 June. On 1 July 2017, they purchased a new espresso machine for $23,000 (ignore GST). They then paid a further $500 (ignore GST) for delivery of the machine and $900 (ignore GST) to have it installed. All amounts were paid in cash. The company estimates that the machine has a 4 year useful life, and a residual value of $4,400 (ignore GST). They intend to depreciate the machine using the straight-line method.

On 30 June 2020, the company sold the espresso machine for $10,000 cash (ignore GST).

REQUIRED -

1. Calculate the cost of the espresso machine.

2. Make depreciation worksheet covering the entire useful life of the machine.

3. Show the required journal entries to record:

i. the acquisition of the machine (combine as 1 entry)

ii. the annual depreciation charge (note: only 1 entry required, as the journal entry will be the same each year, only with different dates)

iii. the disposal of the machine on 30 June 2020.