No.1 (f) Explanations:
The purchase of the welding plant will give rise to a liability of $50,000 that is; ($150,000-$100,000), owing to Welders International as only a part payment was made.
Note 2: The unused office supplies on hand is an asset of D&G Ltd, however the portion that has been used during the period must be expensed. As a result the office supplies balance must be reduced to $2,500 by expensing $22,500, that is; (25,000-$2,500). At the end of the period this expense must be transferred to the Income Statement.
Below are the journal entries with narratives to record the transactions of D&G Ltd.
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The author holds a Bsc (Hons) Degree in Applied Accounting from Oxford Brookes University, England and enjoys a successful career as an Accounting Supervisor and a private tutor.