Reference no: EM132496977

Prepayments and Accruals II

A dentist has an accounting period ending on November 30th. The following amounts have been paid with respect to magazine subscriptions for patients to read in the waiting room:

Date Paid  Amount in £

Quarter ended                   28/02/2011     02/11/2010                     210

Quarter ended                   31/05/2011         01/02/2011               230

Quarter ended                     31/08/2011      01/05/2011               230

Quarter ended                 30/11/2011         01/08/2011                 230

Quarter ended                 28/02/2012               03/11/2011                250

On November 30th, 2010 there was a prepayment related to magazine subscriptions in the Statement of Financial Position (balance sheet) equal to £210.

Calculate the following:

Question i) The amount paid for magazine subscriptions during the accounting period ending on 30/11/2011;

Question ii) The expense for magazine subscriptions to appear in the Income Statement for the accounting period ending 30/11/2011;

Question iii) The effect that the above transactions will have on the company's statement of financial position as at 30/11/2011.

Depreciation

On 1st January, 2019 a company purchased a machine for £3,900 with useful life of 4 years. It decided to provide depreciation @ 15%, using reducing balance method.

Required:

Question a) Prepare a depreciation schedule showing depreciation charged and accumulated over four years. Also show the net book value at the end of the useful life of the machinery.

Question b) Prepare a depreciation schedule showing depreciation charged and accumulated over four years if you were to use straight line depreciation and the salvage value was £900. Also show the net book value at the end of the useful life of the machinery.