ACCOUNTS PREPARATION - JOURNALS AND T ACCOUNTS WITH TASK 2 OF PRACTICE ASSESMENTS

Sineadp

I am really struggling with accounts prep i have failed 3 times now, i have struggled from the beginning with the journals and take 2 on all assesments when it says (machine at cost,machine accumulated depreciation and Disposals) i never know what goes in what T account it has all been different in exams.

PLEASE HELP MY LAST CHANCE IS TUESDAY

Jules18

Disposal accounts all follow the same format although you may just be asked for a figure it can be easier to draft out a T account on paper.

Build it up this way

Debit - Always put in the full figure from the asset at cost account
Credit - Put in the total accumulated depreciation fro the asset - note in the question they may give you the 'carrying amount' instead to mislead you. Simple calculation FA at cost - carrying amount = accum depreciation.

Next stage
Credit - normally only three possible options in the question:
Bank - if sold the item (dr Bank cr Disposal)
Part exchange the item (dr fixed asset at cost cr Disposal)
Sold the item on credit (dr sundry debtors cr Disposal)

Next stage - balance off - you get either
Profit on disposal of asset (Dr Disposal cr Income statement)
Loss on disposal of asset (Dr Income statement cr Disposal)

With the accumulated depreciation questions - check the policy - only two options there - either monthly depreciation or all in first year and none in year of disposal. If need be draw a quick time line broken down in to years to help you work out the number of periods.

Hope that this help

Sineadp

I passed!!!! Thank you

AliceHenley93

I'm really struggling with this too! Failed my first attempt and have resit on 25th! Just cant seem to get it to sink into my head.

I do all the workings right like accumulated depreciation etc but put them the wrong sides!

Fingers crossed

Jules18

Remember DEAD CLIC - If you have debited the asset in the T account originally it will end up on the debit side of the Disposal account. Depreciation reduces the value of the asset and must be a credit

AliceHenley93

Thanks jules. The first assessment I sat the question wasn't set out in the same way as all the practise assessments I've been doing with 2/3 accounts like machine at cost, disposal etc.

Instead it was just laid out as one journal which completely threw me.