Answer 1

Books of Modern Ltd. Machinery Account
Dr.											Cr.
Date		Particulars		J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2003						2003
May 01		Bank (M1)			60,000	Dec.31	Depreciation
							M1 (for 8 months)			8,000
						Dec.31	Balance c/d			52,000
					60,000					60,000
2004						2004
Jan.01		Balance b/d			52,000	Dec.31	Depreciation
July 01		Bank (M2)			20,000		M1	12,000
							M2 (6 months)	2,000		14,000
						Dec.31	Balance c/d
							M1	40,000
							M2	18,000		58,000
					72,000					72,000
2005						2005
Jan.01		Balance b/d				Mar.31	Depreciation (M1) (for 3 months)			3,000
		M1	40,000			Mar.31	Bank (M1)			38,500
		M2	18,000		58,000	Dec.31	Depreciation (M2)			4,000
Mar.31		Profit and Loss (profit)			1,500	Dec.31	Balance c/d			14,000
					59,500					59,500

Working Notes

1. Calculation of annual Depreciation

Particulars	Amount (Rs)
Value on Jan 01, 2005	40,000
Depreciation for 3 Months	(3,000)
Value on March 31, 2005	37,000
Less: Sale of Machine	(38,500)
Profit on sale of Machine 1	1,500