Reference no: EM133034594

Question - (a) At 31 December 2020 the net total of the purchase ledger balances of Marmot & Co. amounted to £17,380, while the balance on the purchase ledger control account was £18,035. Audit tests revealed the following errors, and when the necessary adjustments had been made the balances were reconciled:

1. Purchase ledger balances had been omitted from the list of balances as follows: Credits £650 Debits £120.

2. The purchase returns day book had been undercast by £100.

3. Discounts received of £25 had not been recorded in the control account.

4. A credit balance of £15 in the purchase ledger had been listed as a debit balance.

5. £60 worth of goods returned had not been recorded in the control account.

6. A payment of £90 on 28 December 2020 had been correctly entered in the control account but was posted to the purchase ledger on 3 January 2021.

Required - Prepare a reconciliation between the purchase ledger control account and the net total of the purchase ledger balances.

(b) (i) Roger purchased a machine for £15,000 on 1 January 2020. The transportation costs were £1,500 and installation costs were £750. There were also costs of £1,800 for clearing the site before the machine could be installed. During the first year of use the maintenance costs amounted to £560. Roger depreciates machinery at 20% each year on cost, assuming no residual value.

Required - Calculate the net book value of the machine at 31 December 2020, to the nearest pound.

(ii) The net book value of a Peanut Ltd.'s non-current assets was £2,000,000 at 1 April 2020. During the year ended 31 March 2021, the company disposed of noncurrent assets for £240,000 on which it made a loss of £50,000. The depreciation charge for the year was £170,000.

Required - Calculate the net book value of non-current assets at 31 March 2021.