Prepare journal entries for the depreciation and interest

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On 1 April 2021, Cardena Ltd. purchased land and office building for $440,000 (including GST). The term of the agreement provided for a payment by cheque of 20% of the total purchase. The remainder to be financed with a 10-year interest only loan. Interest is charged at 6% p.a. paid on the last day of each month. The purchase price is allocated 30% to land and 70% to the building. The building has a useful life of 40 years and a residual value of $80,000. The allocation of expenses/income occurs monthly. The reporting period of Cardena starts on 1 July and finishes on 30 June every year.

Required:

Problem 1: Prepare journal entries (round to nearest dollar) for:

Problem 1.1: The acquisition of the land and buildings on 1 April 2021

Problem 1.2: The depreciation and the interest for the month ended 30 June 2021

Reference no: EM132976907

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