Journal Entries and Depreciation Schedule for Nicoladis Ltd and Tamworth Trading Ltd

This article provides journal entries and depreciation schedule for Nicoladis Ltd and Tamworth Trading Ltd. It includes calculations for depreciation expenses, accumulated depreciation, and carrying amount at the end of each year.

Solution to Case Study-1
Journal entries in the books of Nicoladis Ltd.
Sr.
No. Date Description Debit Credit
(a) 1-Jan-17 Machine -1 $350,000
Machine -2 $350,000
GST Paid $70,000
To Bank $770,000
(Being purchase of Machines recorded @ 350,000 + GST)
(b) 31-Dec-22 Depreciation expense $60,000
To Accumulated Depreciation - Machine 1 $30,000
To Accumulated Depreciation - Machine 2 $30,000
(Being depreciation for the year 2022 recorded @ ((350000-50000)/10))
(c) 1-Jan-23 Accumulated depreciation - Machine 1 $180,000
To Machine - 1 $100,000
To Revaluation Surplus $80,000
(Being gain on revaluation surplus recorded on Machine 1)
1-Jan-23 Accumulated depreciation - Machine 2 $180,000
To Machine - 2 $100,000
To Revaluation Surplus $80,000
(Being gain on revaluation surplus recorded on Machine 2)
31-Dec-23 Depreciation expense $56,667
To Accumulated Depreciation - Machine 1 $28,333
To Accumulated Depreciation - Machine 2 $28,333
(Being depreciation for the year 2023 recorded, WN-1)
(d) 31-Dec-23 Accumulated depreciation - Machine 1 $28,333
Cash $220,000
Loss on sale of Machine $21,667
To Machine - 1 $250,000
To GST collected $20,000
(Being sale of Machine recorded, WN-2)

WN-1: Calculation of depreciation for the year 2023
Particulars Machine-1 Machine-2 Total
Purchase cost $350,000 $350,000 $700,000
Depreciation cost from Year 2017 to 2022 (30000*6) $180,000 $180,000 $360,000
WDV as on 31st Dec, 2022 $170,000 $170,000 $340,000
Fair valued amount $250,000 $250,000 $500,000
Revised depreciation for the year $28,333 $28,333 $56,667
WDV as on 31st Dec, 2023 $221,667 $221,667 $443,333
Revised Estimates
Revised useful life (in years) 6.00 6.00
Revised residual value $80,000 $80,000
WN-2: Calculation of loss on sale of Machine
Particulars Machine-1
Sale Proceeds $200,000
WDV as on 31st Dec, 2023 $221,667
Loss on sale of Machine $21,667
(e) During 2025, the company should charge $30,000 on second machine, if the residual value is $50,000 and useful
life is 10 years.

Solution to Case Study-2
(a) Journal entries in the books of Tamworth Trading Ltd.
Date Description Debit Credit
4-Jun-18 Inventory (EF5089) A/c $10,350
GST Paid A/c $1,035
To Accounts Payable A/c $11,385
(Being purchase of Inventory (EF5089) recorded)
9-Jun-18 Accounts receivable A/c $22,550
To Sales A/c $20,500
To GST Collected A/c $2,050
(Being sales of Inventory (EF5089) recorded)
9-Jun-18 Cost of goods sold A/c $9,020
To Inventory (EF5089) A/c $9,020
(Being cost of goods sold recorded)
12-Jun-18 Inventory (EF5089) A/c $9,840
GST Paid A/c $984
To Accounts Payable A/c $10,824
(Being purchase of Inventory (EF5089) recorded)
21-Jun-18 Accounts receivable A/c $17,050
To Sales A/c $15,500
To GST Collected A/c $1,550
(Being sales of Inventory (EF5089) recorded)
21-Jun-18 Cost of goods sold A/c $6,875
To Inventory (EF5089) A/c $6,875
(Being cost of goods sold recorded)
24-Jun-18 Accounts receivable A/c $15,950
To Sales A/c $14,500
To GST Collected A/c $1,450
(Being sales of Inventory (EF5089) recorded)
24-Jun-18 Cost of goods sold A/c $6,525
To Inventory (EF5089) A/c $6,525
(Being cost of goods sold recorded)
26-Jun-18 Inventory (EF5089) A/c $7,750
GST Paid A/c $775
To Accounts Payable A/c $8,525
(Being purchase of Inventory (EF5089) recorded)
30-Jun-18 Accounts receivable A/c $14,300

To Sales A/c $13,000
To GST Collected A/c $1,300
(Being sales of Inventory (EF5089) recorded)
30-Jun-18 Cost of goods sold A/c $6,150
To Inventory (EF5089) A/c $6,150
(Being cost of goods sold recorded)
30-Jun-18 Stock loss A/c $120
To Inventory (EF5089) A/c $120
(Being stock loss recorded on physical verification)
(b) Inventory (EF5089) Record for Product EF5089 for June
Date
Purchase Sales Balance
Qty Rate Amount Qty Rate Amount Qty Rate Amount
1-Jun-18 6,100 2.20 $13,420
4-Jun-18 4,600 2.25 $10,350 6,100 2.20 $13,420
4-Jun-18 4,600 2.25 $10,350
9-Jun-18 4,100 2.20 $9,020 2,000 2.20 $4,400
9-Jun-18 4,600 2.25 $10,350
12-Jun-18 4,100 2.40 $9,840 2,000 2.20 $4,400
12-Jun-18 4,600 2.25 $10,350
12-Jun-18 4,100 2.40 $9,840
21-Jun-18 2,000 2.20 $4,400 - 2.20 $0
21-Jun-18 1,100 2.25 $2,475 3,500 2.25 $7,875
21-Jun-18 4,100 2.40 $9,840
24-Jun-18 2,900 2.25 $6,525 600 2.25 $1,350
24-Jun-18 4,100 2.40 $9,840
26-Jun-18 3,100 2.50 $7,750 600 2.25 $1,350
26-Jun-18 4,100 2.40 $9,840
26-Jun-18 3,100 2.50 $7,750
30-Jun-18 600 2.25 $1,350 - 2.25 $0
30-Jun-18 2,000 2.40 $4,800 2,100 2.40 $5,040
30-Jun-18 3,100 2.50 $7,750
General Ledgers
Sales
Date Description Debit Credit Balance
9-Jun-18 Accounts receivable A/c $20,500 $20,500
21-Jun-18 Accounts receivable A/c $15,500 $36,000
24-Jun-18 Accounts receivable A/c $14,500 $50,500
30-Jun-18 Accounts receivable A/c $13,000 $63,500
$63,500

Inventory (EF5089)
Date Description Debit Credit Balance
1-Jun-18 Opening balance $13,420
4-Jun-18 Accounts Payable A/c $10,350 $23,770
9-Jun-18 Cost of goods sold A/c $9,020 $14,750
12-Jun-18 Accounts Payable A/c $9,840 $24,590
21-Jun-18 Cost of goods sold A/c $6,875 $17,715
24-Jun-18 Cost of goods sold A/c $6,525 $11,190
26-Jun-18 Accounts Payable A/c $7,750 $18,940
30-Jun-18 Cost of goods sold A/c $6,150 $12,790
30-Jun-18 Stock loss A/c $120 $12,670
Cost of Goods Sold
Date Description Debit Credit Balance
9-Jun-18 Inventory (EF5089) A/c $9,020 $9,020
21-Jun-18 Inventory (EF5089) A/c $6,875 $15,895
24-Jun-18 Inventory (EF5089) A/c $6,525 $22,420
30-Jun-18 Inventory (EF5089) A/c $6,150 $28,570
$28,570
GST Paid
Date Description Debit Credit Balance
4-Jun-18 Inventory (EF5089) A/c $1,035 $1,035
12-Jun-18 Inventory (EF5089) A/c $984 $2,019
26-Jun-18 Inventory (EF5089) A/c $775 $2,794
$2,794
GST Collected
Date Description Debit Credit Balance
9-Jun-18 Accounts receivable A/c $2,050 $2,050
21-Jun-18 Accounts receivable A/c $1,550 $3,600
24-Jun-18 Accounts receivable A/c $1,450 $5,050
30-Jun-18 Accounts receivable A/c $1,300 $6,350
Accounts Payable
Date Description Debit Credit Balance
4-Jun-18 Inventory (EF5089) A/c $10,350 $10,350
4-Jun-18 GST Paid A/c $1,035 $11,385
12-Jun-18 Inventory (EF5089) A/c $9,840 $21,225
12-Jun-18 GST Paid A/c $984 $22,209
26-Jun-18 Inventory (EF5089) A/c $7,750 $29,959

26-Jun-18 GST Paid A/c $775 $30,734
$30,734
Accounts Receivable
Date Description Debit Credit Balance
9-Jun-18 Sales A/c $20,500 $20,500
9-Jun-18 GST Collected A/c $2,050 $22,550
21-Jun-18 Sales A/c $15,500 $38,050
21-Jun-18 GST Collected A/c $1,550 $39,600
24-Jun-18 Sales A/c $14,500 $54,100
24-Jun-18 GST Collected A/c $1,450 $55,550
30-Jun-18 Sales A/c $13,000 $68,550
30-Jun-18 GST Collected A/c $1,300 $69,850
$69,850
Stock Loss
Date Description Debit Credit Balance
30-Jun-18 Inventory (EF5089) A/c $120 $120
$120
(c) Income Statement for Tamworth Trading Ltd for the month of June, 18
Particulars Amount
Sales $63,500
Less: Cost of goods sold
Opening inventory $13,420
Add: Purchases $27,940
Less: Closing inventory -$12,790
Less: Stock loss -$120 $28,450
Gross Profit $35,050

Solution to Case Study-3
(i) Depreciation Schedule using straight line Method
Purchase Cost 1,200,000
Residual Value 100,000
Useful life (years) 10
Depreciation expense pa = (1,200,000-100,000)/10
Depreciation expense pa = 110,000
Rate of depreciation = 110,000/1,200,000
Rate of depreciation = 9.17%
Year ended Annual depreciation
expense
Accumulated
Depreciation
Carrying amount at
end of year
30-Jun-20 110,000 110,000 1,090,000
30-Jun-21 110,000 220,000 980,000
30-Jun-22 110,000 330,000 870,000
30-Jun-23 110,000 440,000 760,000
30-Jun-24 110,000 550,000 650,000
(ii) Depreciation Schedule using diminishing balance method
Depreciation rate = 2 X rate of depreciation as per SLM
18.33%
Year ended Annual depreciation
expense
Accumulated
Depreciation
Carrying amount at
end of year
30-Jun-20 220,000 220,000 980,000
30-Jun-21 179,667 399,667 800,333
30-Jun-22 146,728 546,394 653,606
30-Jun-23 119,828 666,222 533,778
30-Jun-24 97,859 764,081 435,919
(iii) Depreciation Schedule using sum of years digit method
Sum of years = 55
Year ended Years digit
Annual
depreciation
expense
Accumulated
Depreciation
Carrying
amount at end
of year
30-Jun-20 10 200,000 200,000 1,000,000
30-Jun-21 9 180,000 380,000 820,000
30-Jun-22 8 160,000 540,000 660,000
30-Jun-23 7 140,000 680,000 520,000
30-Jun-24 6 120,000 800,000 400,000
(iv) Depreciation Schedule using units of production method

Total planned production units = 500,000
Year ended Units of output
Annual
depreciation
expense
Accumulated
Depreciation
Carrying
amount at end
of year
30-Jun-20 50,000 110,000 110,000 1,090,000
30-Jun-21 45,000 99,000 209,000 991,000
30-Jun-22 55,000 121,000 330,000 870,000
30-Jun-23 58,000 127,600 457,600 742,400
30-Jun-24 60,000 132,000 589,600 610,400