Question

A Company purchased a machinery for ₹ 50,000 on 1st Oct., 2016. Another machinery costing ₹ 10,000 was purchased on 1st Dec., 2017. On 31st March, 2019, the machinery purchased in 2016 was sold at a loss of ₹ 5,000. The Company charges depreciation at the rate of 15% p.a. on Diminishing Balance Method. Accounts are closed on 31st March every year.
Prepare Machinery account for 3 years.

Answer 1

Machinery Account
Dr.					Cr.
Date	Particulars		Amount (₹)	Date		Particulars		Amount (₹)
2016				2017
Oct. 01	Bank A/c (M1)		50,000	Mar. 31		Depreciation A/c (for 6 months)		3,750
				Mar. 31		Balance c/d		46,250
			50,000					50,000
2017				2018
Apr. 01	Balance b/d		46,250	Mar. 31		Depreciation A/c
Dec. 01	Bank A/c (M2)		10,000			M1	6,938
						M2 (for 4 months)	500	7,438
				Mar. 31		Balance c/d
						M1	39,312
						M2	9,500	48,812
			56,250					56,250
2018				2019
Apr. 01	Balance b/d			Mar. 31		Depreciation A/c		5,897
	M1	39,312				Bank A/c (Sale of M1)		28,415
	M2	9,500	48,812			Profit and Loss A/c (Loss on Sale of M1)		5,000
				Mar. 31		Depreciation A/c (M2)		1,425
				Mar. 31		Balance c/d		8,075
			48,812					48,812

Working Note: Calculation of Sale Price of M1

Particulars	Amount
Value of Machinery on Apr. 01, 2018	39,312
Less: Depreciation for 12 months	5,897
Value of Machinery on Mar. 31, 2019	33,415
Less: Loss on Sale (given)	5,000
Sale Value (Balancing Figure)	28,415