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Question - On 2015 January 1, Nicola Newman bought machinery for her printing business at a cost of $20,000 and paid with money in the bank. She bought another piece of machinery on 2016 January 1 for $13,500 and paid with cash. She charges depreciation at the rate of 10% per annum using the Straight-Line method. The business' policy is to charge a full year's depreciation in the year of purchase of fixed assets but not charge any in the year of sale.
On 2017 June 30 the first machine was sold for $12,500 cash. On that same day, machinery costing $14,000 was bought on credit from Phil's Mechanics Ltd.
Required -
A. Prepare the Machinery Account for 2015, 2016 and 2017.
B. Prepare the Machinery Disposal Account for 2017.
C. Prepare the Provision for Depreciation Account for the three years.
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