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SCENARIO: AgriSteel Heavy Industries manufactures specialized farming machinery. Draft financial statements for the year ended 30 September 20X6 show a draft net profit of $1,200,000. The following adjustments are needed:
- Closing inventory was valued at cost $450,000, but includes damaged tractors costing $50,000 that can only be sold for $30,000 after $5,000 repair costs.
- A machine bought for $200,000 on 1 Oct 20X5 was incorrectly charged to repairs. Depreciation is 20% reducing balance.
- A provision for a legal claim of $80,000 needs to be created.
- The allowance for receivables needs to increase by $15,000.
Calculate the Net Realizable Value (NRV) of the damaged tractors. (Enter the number only)
ACCA · Question 54 · Single Entity Accounts
SCENARIO: AgriSteel Heavy Industries manufactures specialized farming machinery. Draft financial statements for the year ended 30 September 20X6 show a draft net profit of $1,200,000. The following adjustments are needed:
- Closing inventory was valued at cost $450,000, but includes damaged tractors costing $50,000 that can only be sold for $30,000 after $5,000 repair costs.
- A machine bought for $200,000 on 1 Oct 20X5 was incorrectly charged to repairs. Depreciation is 20% reducing balance.
- A provision for a legal claim of $80,000 needs to be created.
- The allowance for receivables needs to increase by $15,000.
What is the initial journal entry to correct the $200,000 machine incorrectly charged to repairs (ignoring depreciation for a moment)?
SCENARIO: AgriSteel Heavy Industries manufactures specialized farming machinery. Draft financial statements for the year ended 30 September 20X6 show a draft net profit of $1,200,000. The following adjustments are needed:
- Closing inventory was valued at cost $450,000, but includes damaged tractors costing $50,000 that can only be sold for $30,000 after $5,000 repair costs.
- A machine bought for $200,000 on 1 Oct 20X5 was incorrectly charged to repairs. Depreciation is 20% reducing balance.
- A provision for a legal claim of $80,000 needs to be created.
- The allowance for receivables needs to increase by $15,000.
What is the initial journal entry to correct the $200,000 machine incorrectly charged to repairs (ignoring depreciation for a moment)?
Answer options:
Debit Repairs Expense $200,000; Credit Non-Current Assets $200,000
Debit Non-Current Assets $200,000; Credit Repairs Expense $200,000
Debit Non-Current Assets $200,000; Credit Cash $200,000
Debit Suspense $200,000; Credit Repairs Expense $200,000
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