Prepare journal entries to record purchase of the equipment

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Question - Saigon Manufacturing purchased equipment on 1 July 2016 for $39,800 cash. Transport and installation costs of $4,200 were paid on 5 July 2016. Useful life and residual value were estimated to be 10 years and $1,800 respectively. Saigon Manufacturing depreciates equipment using the straight-line method and has a financial year ending on 30 June. On 1 July 2018, the company adopted the revaluation model to account for equipment. An expert valuation was obtained showing that the equipment had a fair value of $30,000 at that date. The useful life and residual value remained unchanged. On 30 June 2019, depreciation for the year was charged and the equipment's carrying amount was re-measured to its fair value of $16,000. The residual value remains unchanged; however, it was estimated the useful life would now be 6 years. On 30 September 2019, the equipment was sold for $8,400 cash. Ignore GST.

Required - Prepare the journal entries to record the purchase of the equipment on 1 July 2016 through to its disposal on 30 September 2019. Show all workings and round amounts to the nearest dollar.

Reference no: EM132565916

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