Amy and Jevin Mounty own a textile design business in Beau Bassin. They bought a new computer which cost $4000 on 1 January 2020. The
Amy and Jevin Mounty own a textile design business in Beau Bassin. They bought a new computer which cost $4000 on 1 January 2020. The depreciation charge for the computer was 40% per annum using reducing balance method. Because of rapid developments in technology, the computer was out of date by end of 2021. Amy decided to sell the computer and was offered $600 which she accepted. The computer was sold on 31 December 2021. The financial year for the business runs from 1 January to 31 December. a. Calculate the accumulated depreciation charge and the net book value of the computer at the end of 2020 and 2021. b. Calculate the profit or loss on disposal of the computer. c. Show the Computer account and the Provision for depreciation Account for the year ended 31 December 2020. d. List down all the journal entries for the disposal of the computer.
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