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Arthur Chen, a newly qualified accountant, was on his second audit job in a country area with a new client called Parson Farm Products. He was looking through the last four years of financials and doing a few ratios, when he noticed something odd. The current ratio went from 1.9 in 2009 down to 0.3 in 2010, despite the fact that 2010 had record income. He decided to sample a few transactions from December 2010. He found that many of Parson’s customers had returned products to the firm because of substandard quality. Chen discovered that the business was clearing the receivables (that is, crediting accounts receivable) but hiding the debits in an obscure non-current asset account called ‘grain reserves’ to keep the firm’s income ‘in the black’ (that is, positive income).  
Requirment:   
1- How did the fraudulent accounting just described affect the current ratio?     
Q.1
Neswick Ltd. purchased new machinery on 1st January 2014 for $154,000 on account. The machine has a useful life of 7 years, at the end of which it will be disposed off at nil value. As at 1 January 2017, the machine has a market price of $99,000.  
Neswick record depreciation expense once a year.   
The company sold the machine on 30.6.2018 & received an amount of $66,000.   
(All amounts include GST)  
Required:   
Provide journal entries for the following (explanations are not required):  
a) Purchase of the machine on 1.1.2014
 b) Relevant journals entries for the years 2014, 2015 & 2016, both without & with revaluation (per AASB 116). c) Relevant journals entries for the years 2017, both without & with revaluation. (per AASB 116).   d) Relevant journals entries for the years 2018, both without & with revaluation



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