To find the total cost of machinery purchased during the year, we need to first calculate the total cost of machinery available during the year. This is done by adding the opening balance of the machinery account to the cost of machinery purchased during the year.

Next, we subtract the closing balance of the machinery account from the total cost of machinery available during the year. This gives us the cost of machinery sold during the year.

We then add back the depreciation charged on the machinery sold and subtract the profit on the sale of the machinery to get the original cost of the machinery sold.

Finally, we subtract the original cost of the machinery sold from the cost of machinery sold during the year to get the cost of machinery purchased during the year.

Let's calculate:

1. Opening balance of machinery account = $500,000
2. Closing balance of machinery account = $650,000
3. Depreciation expense for the year = $50,000
4. Depreciation charged on machinery sold = $130,000
5. Profit on sale of machinery = $20,000
6. Carrying value of machinery = $90,000

First, calculate the total cost of machinery available during the year:

Opening balance + Purchases = Closing balance + Depreciation - Profit + Carrying value of machinery sold

$500,000 + Purchases = $650,000 + $50,000 - $20,000 + $90,000

Purchases = $650,000 + $50,000 - $20,000 + $90,000 - $500,000

Purchases = $270,000

So, the total cost of machinery purchased during the year is $270,000.

Therefore, none of the options A: $370,000, B: $200,000, C: $280,000, D: $300,000 are correct.

Question

To find the total cost of machinery purchased during the year, we need to first calculate the total cost of machinery available during the year. This is done by adding the opening balance of the machinery account to the cost of machinery purchased during the year.

Next, we subtract the closing balance of the machinery account from the total cost of machinery available during the year. This gives us the cost of machinery sold during the year.

We then add back the depreciation charged on the machinery sold and subtract the profit on the sale of the machinery to get the original cost of the machinery sold.

Finally, we subtract the original cost of the machinery sold from the cost of machinery sold during the year to get the cost of machinery purchased during the year.

Let's calculate:

1. Opening balance of machinery account = $500,000
2. Closing balance of machinery account = $650,000
3. Depreciation expense for the year = $50,000
4. Depreciation charged on machinery sold = $130,000
5. Profit on sale of machinery = $20,000
6. Carrying value of machinery = $90,000

First, calculate the total cost of machinery available during the year:

Opening balance + Purchases = Closing balance + Depreciation - Profit + Carrying value of machinery sold

$500,000 + Purchases = $650,000 + $50,000 - $20,000 + $90,000

Purchases = $650,000 + $50,000 - $20,000 + $90,000 - $500,000

Purchases = $270,000

So, the total cost of machinery purchased during the year is $270,000.

Therefore, none of the options A: $370,000, B: $200,000, C: $280,000, D: $300,000 are correct.

Knowee AI · Accepted Answer