Question

Laro TANGIBLE FIXED ASSETS「IN USE Exercise 1 The ABC Company has made the following transactions: 1) the manufacturing machinery purchased; payment agreed to next month; value of assets: 40.000 EUR; the company plans to finance this transaction with the use of bank credit valued in USD 2) 2.000 EUR - costs of transport and installation of the machinery paid in cash; 3) credit interest accounted: 500 EUR; 4) negative exchange rate differences on bank credit: 300 EUR; 5) positive exchange rate differences on bank credit: 100 EUR; 6) the machinery accounted as tangible fixed assets in use To complete: Post entries to accounts.

Please help with the task.

Answer 1

  Particulars Debit Credit

1. Machinery a/c.................................Dr EUR 40,000

To vendor a/c EUR 40,000

[Being machinery purchased on credit]

2. Machinery a/c.................................Dr EUR 2,000

To cash a/c EUR 2,000

[Being transport and installation expenses paid in cash]

Note: Transport and installation charges will be included in the cost of machinery.

3. Bank a/c.................................Dr    EUR 500

To Interest a/c      EUR 500

[Being interest credited]

4. Profit & loss a/c.................................Dr EUR 500

To Bank a/c EUR 500

[Being exchange loss at bank]

5. Bank a/c.................................Dr     EUR 500

To Profit & loss a/c EUR 500

[Being exchange gain at bank]