To record the depreciation on furniture and vehicles for the year ending 30 June 2023, we first need to calculate the depreciation amounts based on the given information.
1. Furniture Depreciation Calculation
- Cost of Furniture: R80,000
- Depreciation Rate: 12.5% per annum
Depreciation for Furniture for the Year Ending 30 June 2023:
\[ \text{Depreciation for Furniture} = \text{Cost} \times \text{Depreciation Rate} \] \[ \text{Depreciation for Furniture} = R80,000 \times 12.5% = R10,000 \]
2. Vehicle Depreciation Calculation
- Cost of Vehicles: R300,000
- Depreciation Rate: 20% per annum
First Year of Depreciation (20.21 to 20.22)
- Depreciation for the First Year: \[ \text{Depreciation} = R300,000 \times 20% = R60,000 \]
- Carrying amount after 1 year: \[ \text{Carrying Amount} = R300,000 - R60,000 = R240,000 \]
Second Year of Depreciation (20.22 to 20.23)
- Depreciation for the Second Year: \[ \text{Depreciation} = R240,000 \times 20% = R48,000 \]
- Carrying amount after 2 years: \[ \text{Carrying Amount} = R240,000 - R48,000 = R192,000 \]
Summary of Depreciation
- Total Depreciation on Furniture for the Year Ending 30 June 2023: R10,000
- Total Depreciation on Vehicles for the Year Ending 30 June 2023: R48,000
Journal Entries
For Depreciation of Furniture
Date: 30 June 2023
Dr Depreciation Expense (Furniture) R10,000
Cr Accumulated Depreciation (Furniture) R10,000
(To record annual depreciation on furniture at 12.5% on cost)
For Depreciation of Vehicles
Date: 30 June 2023
Dr Depreciation Expense (Vehicles) R48,000
Cr Accumulated Depreciation (Vehicles) R48,000
(To record annual depreciation on vehicles at 20% on the diminishing balance)
Explanation
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Depreciation Expense (Furniture): This entry reflects the annual depreciation expense of R10,000 for furniture, which has been calculated at 12.5% of the original cost.
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Accumulated Depreciation (Furniture): This account is credited to show that the value of the furniture has decreased due to depreciation.
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Depreciation Expense (Vehicles): This entry records the depreciation expense of R48,000 for the vehicles, calculated at 20% of the diminishing balance (after the first year’s depreciation).
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Accumulated Depreciation (Vehicles): Similar to furniture, this account shows the accumulated depreciation on the vehicles, reflecting their decreased value.
This approach ensures that both the furniture and vehicles are accurately accounted for in the financial statements, adhering to the principles of depreciation and matching expenses with revenues.