1. **Problem Statement:** We need to record transactions related to machinery for Emantimandze Ltd for the year ended 31 August 2020, including purchases, sales, and depreciation using the diminishing balance method at 10% per year. 2. **Formulas and Rules:** - Depreciation (diminishing balance) = Book value at start of period \times Depreciation rate - Machinery cost includes purchase price + carriage + installation - When selling machinery, remove cost and accumulated depreciation, record sale proceeds, and calculate gain/loss. 3. **Step-by-step Ledger Entries:** **i. Machinery Account:** - Opening balance (1 Sept 2019): SZL 250,000 - Add purchase (1 Dec 2019): SZL 80,000 + SZL 10,000 (carriage) + SZL 5,000 (installation) = SZL 95,000 - Remove cost of sold machine (purchased 1 Mar 2017 for SZL 60,000) on 1 June 2020 Machinery account summary: - Debit: 250,000 (opening) + 95,000 (purchase) - Credit: 60,000 (sale) - Closing balance = 250,000 + 95,000 - 60,000 = SZL 285,000 **ii. Accumulated Depreciation Account:** - Opening balance: SZL 65,000 - Depreciation for old machinery (before sale): Calculate depreciation from 1 Sept 2019 to 1 June 2020 (9 months) - Depreciation for new machinery: from 1 Dec 2019 to 31 Aug 2020 (9 months) - Remove accumulated depreciation of sold machine Calculate depreciation: - Old machinery book value before sale: SZL 60,000 - Depreciation rate: 10% per year diminishing balance - Depreciation for 9 months = SZL 60,000 \times 10% \times \frac{9}{12} = SZL 4,500 - Accumulated depreciation on sold machine at sale = original accumulated depreciation + depreciation for 9 months - Remove accumulated depreciation of sold machine (assumed to be SZL 60,000 \times 10% \times 3 years approx SZL 18,000 + 4,500 = SZL 22,500) - Depreciation on remaining machinery (250,000 - 60,000 + 95,000 = 285,000) for full year: - For simplicity, calculate depreciation on opening balance and new purchase separately: - Opening machinery (excluding sold): 250,000 - 60,000 = 190,000 - Depreciation on 190,000 for full year = 190,000 \times 10% = 19,000 - Depreciation on new machine (95,000) for 9 months = 95,000 \times 10% \times \frac{9}{12} = 7,125 - Total depreciation = 4,500 (old machine before sale) + 19,000 + 7,125 = 30,625 - Closing accumulated depreciation = 65,000 + 30,625 - 22,500 = SZL 73,125 **iii. Depreciation Account:** - Total depreciation expense for the year = SZL 30,625 **iv. Machinery Disposal Account:** - Sale proceeds: SZL 43,000 - Book value of sold machine = SZL 60,000 - accumulated depreciation (assumed SZL 22,500) = SZL 37,500 - Gain on sale = Sale proceeds - Book value = 43,000 - 37,500 = SZL 5,500 4. **Statement of Financial Position as at 31 August 2020:** - Machinery at cost: SZL 285,000 - Less: Accumulated depreciation: SZL 73,125 - Net book value: SZL 211,875 **Final answers:** - Machinery account closing balance: SZL 285,000 - Accumulated depreciation closing balance: SZL 73,125 - Depreciation expense: SZL 30,625 - Gain on disposal: SZL 5,500 - Net machinery value in Statement of Financial Position: SZL 211,875