Help! Part exchange of assets

[Akpotaire Dennis Koko]

Hello Great Accountants,
I'm having problem interpreting this additional information while preparing a particular final account. It says "Plant which stood at #500 in the books on 1st January of the current financial year which ended 31st December was disposed off for #190 in part exchange for a new machine costing #420. A net invoice of #230 was passed through purchase day book"
N.B Cost of plant and machinery given in the trial balance is #2017
My interpretation was that the cost of the plant #500 will be credited to the plant and machinery account to write off the plant from it. Then the cost of the new machine #420 is Debited to the plant and machinery account under the heading 'Creditor, trade in allowance'. Then the net invoice passed through purchase day book in error is credited. When I did this, the equity and liabilities side of the statement of financial position was greater than that of the assets side by #190. I don't understand why this is so

 

[Triest123]

Hello Great Accountants,
When I did this, the equity and liabilities side of the statement of financial position was greater than that of the assets side by #190. I don't understand why this is so

Base on the given information, the entry should be :

Dr Machine # 420
Dr Loss on disposal of Plant # 310
Cr Plant # 500
Cr Purchase # 230

(To record the acquisition of the new machine in exchange for the old plant
and to correct that acquisition which was wrongly booked as purchase)

 

[Akpotaire Dennis Koko]

Thanks for your reply.
I've followed your correction. I transferred the loss on disposal of #310 to the Dr side of the income statement. It made the equity and liabilities section to be undercast by #120.
In the question there are two additional information that contains #120. They are:
A. Purchase invoices amounting to #120 had been omitted from the books which I treated by Debiting purchases and Crediting Payable with #120.
B. Private purchases amounting to #120 had been included in the purchase day book which I treated by Crediting purchases, Debiting Payable and Debiting Drawings.
Did I get it wrong somewhere?

 

[Triest123]

Thanks for your reply.

Did I get it wrong somewhere?

A. Correct

B. Dr Drawings #120 Cr Purchases #120

 

[Akpotaire Dennis Koko]

A. Correct

B. Dr Drawings #120 Cr Purchases #120

Wow! It balanced. Thanks!

 

[Veccydee]

Hello Great Accountants,
I'm having problem interpreting this additional information while preparing a particular final account. It says "Plant which stood at #500 in the books on 1st January of the current financial year which ended 31st December was disposed off for #190 in part exchange for a new machine costing #420. A net invoice of #230 was passed through purchase day book"
N.B Cost of plant and machinery given in the trial balance is #2017
My interpretation was that the cost of the plant #500 will be credited to the plant and machinery account to write off the plant from it. Then the cost of the new machine #420 is Debited to the plant and machinery account under the heading 'Creditor, trade in allowance'. Then the net invoice passed through purchase day book in error is credited. When I did this, the equity and liabilities side of the statement of financial position was greater than that of the assets side by #190. I don't understand why this is so

Pls, how do I adjust the above additional information in profile and loss account and also in balance sheet